Dubai deal just the kickoff in a long game: Analysis

RELATED NEWS Dubai World to propose plan to restructure $26 bn debt

MIXED RECORD

Dissents in the ranks is a threat to the restructuring as bondholders in Nakheel will have a different idea of how the restructuring should unfold to senior lenders and may refuse to play ball.

"Whatever the proposal, creditors will say that it doesn't work for them and will form their own group to influence the restructuring," the London-based banker said.

Only one Middle Eastern restructuring has been resolved so far -- Kuwait's Global Investment House reached a deal with creditors in December to reschedule USD 1.7 billion of debt and entered new three-year facilities with 53 lenders.

"The other restructurings are out there and are going nowhere as there is not a unanimous consenting creditor group," the senior banker said.

Other restructurings such as Kuwait's Investment Dar had to go to court to overcome resistance from minority dissenters, which could also be an option for Dubai World if its restructuring proves divisive.

Investment Dar, which owns half of British carmaker Aston Martin, was put under the protection of Kuwait's USD 5.2 billion Financial Stability Law package on March 14 after 20% of creditors fought the company's restructuring plan.

All litigation and judgements against the company by dissenting minority investors will be stayed until the restructuring plan has been agreed by the court. The restructuring plan is expected to offer full repayment and will now be monitored by the Central Bank of Kuwait.