UPDATE 2-Dubai Holding pays about $100 mln in bond payments

Sun Jan 24, 2010 7:24am EST

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* Company in spotlight after Dubai World debt delay

* Dubai Holding unit has $1.25 bln loan due in June (Adds background)

By Amran Abocar

DUBAI, Jan 24 (Reuters) - A Dubai Holding unit, which belongs to the ruler of the emirate, said on Sunday it had made about $100 million worth of scheduled distribution payments on three bonds due over the next five years.

The move by Dubai Holding Commercial Operations Group (DHCOG), the holding firm of Dubai Holding's property, business parks and hospitality units, could help allay fears that more Dubai-linked entities face debt commitments they cannot meet.

"It sends the right signal to the markets," said an analyst at an international lender, who asked not to be identified.

"I have no doubt they will struggle over the next few months. But they will get over it with the support of Abu Dhabi.

"I don't think Abu Dhabi will let them down." Dubai rocked global markets on Nov. 25 when it asked for a delay in repaying $26 billion in debt linked to its Dubai World conglomerate and its property units Nakheel and Limitless World.

Arabic-language daily Al Ittihad, citing an internal report on Sunday, said the conglomerate's property and investment assets exceed $120 billion at the end of 2009, enabling it to cover its debt.

Dubai World -- which has yet to publicly outline its restructuring plans and present a standstill agreement to creditors -- managed to stave off a $4.1 billion default on an Islamic bond linked to property unit, Nakheel.

That repayment came thanks to a last-minute bailout by wealthier neighbour Abu Dhabi on Dec. 14.

With the Nakheel bond out of the way, Dubai Holding was next in the sights of jittery investors, concerned about the group's debt position.

The company is made up of DHCOG, Dubai International Capital and Dubai Group, which own foreign assets including stakes in the HSBC (HSBA.L), Madame Tussauds and Travelodge.

Dubai Holding has a $1.14 billion loan maturing August 2011, but more pressing is Dubai International Capital's $1.25 billion loan which matures in June 2010.

In a statement to Nasdaq Dubai, DHCOG said it had made the periodic distributions which come due on Feb. 1, 2010.

The company said the three payments consist of: a 35.63 million euro distribution on a 750 million euro note due Jan. 30, 2014; 30 million pounds on a 500 million pound note due Feb. 1, 2017 and $828,650 on a $500 million note due Feb. 1, 2010.

"They're current on their payments but that in itself doesn't resolve the longer term issues in regards to Dubai World's restructuring," said Mohieddine Kronfol, managing director, at Algebra Capital.

"It doesn't take away from the fact that they're still restructuring their debts so it's not a material piece of information for the markets."

SPENDING PLANS

Dubai has put on a brave face in the wake of the debt crisis, with the Gulf Arab emirate formally opening the world's tallest tower, the Burj Khalifa, in a glitzy ceremony on Jan. 4.

Meanwhile, Nakheel said last month that plans to hand over to developers The World islands, an archipelago shaped like the map of the world, continued.

State-run Borse Dubai, a shareholder in the London Stock Exchange (LSE.L), said on Jan 19 it had decided to exercise a one-year option to extend a $2.5 billion synydicated loan facility.

On Sunday the chief executive of Dubai Properties said the company planned to spend up to 4 billion dirhams ($1.09 billion) annually in the next three years on its future plans.

Speaking to an Arabic-language daily, Khalid al-Malik said the company would depend on self-financing to execute projects within its existing plans. [ID:nGEE5B820Y]

For a FACTBOX on Dubai Holding, click on [ID:nGEE5B820Y]

For a TAKE A LOOK on Dubai's debt crisis see [ID:nGEE5AO2FN]

(Reporting by Amran Abocar; Editing by Greg Mahlich)

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