Dubai World plans to sell its prized assets over a period of eight years to generate as much as $19.4-billion (U.S.) to pay off creditors burned by its overambitious expansion, according to a restructuring document obtained by Reuters on Wednesday.
The state-owned conglomerate told creditors at a July 22 meeting, held at Dubai's lavish Atlantis Hotel, that its capital structure was inappropriate and needed "urgent" restructuring, according to the document handed out at the meeting.
Dubai World, the conglomerate with investments in global luxury hotels to theme parks, said in the document asset disposals over an eight-year period will help generate up to a maximum of $19.4-billion, while similar sales based on current prices would be worth a maximum of $10.4-billion.
It projected mid-point disposal proceeds of $17.6-billion.
"DW [Dubai World]lender recoveries [will be]significantly enhanced if DW is given time to rebuild and realize value over a five to eight year horizon," the document said.
Also, in a sign of the deep overhaul that Dubai World has committed to, the company will appoint a new managing director and chief financial officer.
However, Aidan Birkett, the officer-in-charge of its restructuring, will remain in place until December.
Dubai World is restructuring billions of dollars in debt. The government has agreed to take a hit on its claims against the firm, leaving $14.4-billion in bank debt outstanding.
The company's plans involves repayment over five to eight years, with interest of between 1 per cent to 3.5 per cent.
Dubai World's document shows the company proposed to dispose of its "investment assets", including its stakes in luxury U.S. retailer Barney's, Dubai-based Atlantis Hotel, a lavish pink palace perched at the seaward tip of its island development and casino operator MGM Resorts International, over a period of five years.
Dubai World's private equity arm, Istithmar which owns most of the overseas assets, is expected to raise up to $4.5-billion over a five year period.
It has identified ports operator DP World, Jebel Ali Free Zone and Dubai Maritime City (DMC) and Dry Docks World as its "strategic assets" which may generate up to $11.8-billion when put on sale over a period of eight years.