Dubai World is looking to hold on to key revenue-generating assets including port operator DP World and its stake in Standard Chartered, but creditors may yet force it to part ways with prized entities.
The troubled state-controlled conglomerate on Monday shed some light on how it planned to restructure USD26 billion in debt, including through asset sales, in its first statement since requesting a delay in repaying billions in debt till May 2010.
The restructuring excludes firms on a "stable financial footing" such as Istithmar World, DP World and Jebel Ali Freezone, implying its global crown jewels would not be up for grabs, but leaving its battered property firms on the line.
"I don't think they're in a position to choose," Khuram Maqsood, managing director of Emirates Capital and a former director at Istithmar. "Dubai World desperately needs cash. Everything is for sale. I don't think anything is sacred in the current environment."
Bondholders are still reeling from the shock announcement and are unlikely to unanimously agree to the standstill without strong guarantees, especially after the government also distanced itself from the company's troubles on Monday.
The assets of the two property developers in question, Nakheel, which at the end of 2008 had a project portfolio of about USD110 billion, and Limitless, are arguably the least interesting to investors.
Property prices in the emirate have already fallen some 50 percent since their peaks last year, transactions are negligible and some analysts see a further 30 percent decline.
Nakheel's assets include the Palm Jumeirah, the most advanced in terms of completion of three man-made islands in the shape of palms off the coast of Dubai, and the Atlantis hotel, a joint venture with South African tycoon Sol Kerzner.
Limitless, which has completed few projects to date, says it has a USD100 billion portfolio.
"Who wants to buy these assets and at what price? If the Dubai real estate market conditions continue to depreciate and it will ... then they can wait until it depreciates further," said John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group in Riyadh.
In contrast, Istithmar's portfolio ranges from US luxury retailer Barneys to the luxury W Hotel in Washington, DC as well as sought-after property in London including 10 Whitehall Place. Infinity World, another unit exempt from the plans, is a stakeholder in MGM Mirage.
Next page: Emirates assets worth 2 to 4 times its debts
READ MORE ON Dubai World, Dubai, Dubai debt crisis, , DP World , restructure, repaying billions , Istithmar World, Jebel Ali Freezone, Emirates Capital , Nakheel, Palm Jumeirah, South African tycoon Sol Kerzner, 10 Whitehall Place
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