Dubai World will seek to roll over a $1.2bn Islamic loan at its Limitless property unit due in March but it is unclear whether banks will agree in the absence of a standstill agreement.
The state-owned firm, which rattled global markets when it requested a delay on $26bn of debt linked to its main property units Nakheel and Limitless World last November, has been negotiating with an unofficial bank coordinating committee. But it has yet to present a formal proposal on plans to repay some $22bn in debt.
Limitless’ two-year Islamic facility does not have the option of an extension which would mean the company would need to reach a new agreement with lending banks, according to loan documentation.
“It won’t be a straightforward process,” said a Gulf-based lender. “You can’t say what the banks will do. Dubai World might approach and ask each and everyone to agree to a new agreement. If there was a standstill agreement, this would not be an issue.”
Limitless’ syndicated loan from 2008 was led by Emirates Bank — now part of Emirates NBD — Emirates Islamic Bank, Arab National Bank and National Bank of Abu Dhabi.
The Shariah-compliant facility included 18 banks from Asia and Europe as well as the Middle East.
The presence of a large number of local lenders may work in Dubai World’s favour, with them expected to be therefore more amenable to a delay.