* May 2015 maturity of $4.4 bln seen as test of strategy
* Shaibani says asset sales successful, can meet maturity
* Expects more debt repayments ahead of schedule
* To discuss options with creditors, including for 2018
* Speaking just before annual meeting of creditors
By Mirna Sleiman
DUBAI, March 31 Dubai World, the
conglomerate at the centre of the emirate's debt crisis, has the
means to make its first big repayment on time next year and
expects to pay off more of its debt ahead of schedule, a top
Mohammed al-Shaibani, chief executive of sovereign wealth
fund Investment Corp of Dubai and a key figure in negotiating
the emirate's debt restructurings in recent years, said Dubai
World would be able to meet a $4.4 billion loan maturity in May
2015 and to make some other repayments early.
Quoting sources, Reuters reported earlier this month that
state-owned Dubai World had repaid $284.5 million of its debts
ahead of schedule. Shaibani confirmed this and said more early
repayments were likely to be made.
"Around $280 million has already been paid ahead of
maturity, and we will continue to do so," he said without
Dubai World ran into trouble during the emirate's 2009
property market collapse and had to restructure $25 billion of
debt, of which about $14.4 billion was owed to around 90 local
and foreign banks, and the remainder to the Dubai government.
The restructuring plan aims to buy time for the prices of
Dubai World's assets to recover, allowing it to raise money for
debt repayments through the sale of some assets. The May 2015
maturity is being seen as the first major test of this strategy.
"We have the means to pay off the first tranche of debt
maturing in 2015 given the group's precise and successful asset
disposable plan," Shaibani said.
He spoke to Reuters ahead of an annual meeting of Dubai
World's creditors, which is expected to occur this week, and
before top Dubai executives and officials visit London next week
for a roadshow with international investors.
Dubai World debt maturities: link.reuters.com/byw97v
The approach of Dubai World's May 2015 maturity is being
closely watched by local and foreign creditor banks which lent
the conglomerate billions of dollars before it and other
state-linked Dubai firms ran into trouble.
A sharp drop in the yields on Dubai debt in the past six
months suggests financial markets believe the strategy will
work, but some bankers are not entirely sure.
In the run-up to this week's creditor meeting, there has
been speculation among some bankers that it could discuss a
"Plan B" - perhaps some form of refinancing involving Dubai
banks - in case the May 2015 maturity is not paid in full.
But Shaibani's comments to Reuters suggested he saw no need
for any further restructuring of the debt.
He did, however, say various "options" would be discussed
with creditors, including some affecting another big debt
maturity for Dubai World, about $10 billion in 2018.
"We are sitting with lenders to discuss options. We even
have some plans for the debt maturing in 2018 that we will
discuss with them in due course," Shaibani said.
Shaibani did not elaborate on proposed plans for the 2018
debt but some bankers have speculated Dubai World could offer to
buy back some of it before maturity at a discount, satisfying
foreign banks which wanted to remove it from their books.
Dubai World has made over half a dozen asset sales since the
crisis. Last December the group sold a 50 percent stake in Miami
Beach's Fontainebleau hotel back to south Florida developer
Turnberry. The price was not disclosed, but Dubai World
originally paid $375 million for the stake in 2008.
The conglomerate still has a vast array of domestic and
international assets, including nearly 80 percent of local ports
operator DP World, stakes in MGM Resorts International
of the United States and the CityCenter development in
Las Vegas, and holdings in financial advisory firm Perella
Weinberg and Canadian entertainment group Cirque du Soleil.
Rebounding stock and real estate markets have strengthened
Dubai World's balance sheet. DP World's market capitalisation,
for example, has nearly doubled since 2011 to $14.7 billion.
A report by regional investment bank EFG Hermes last week
said most Dubai banks had reclassified their exposure to Dubai
World debt to "performing" because of the improved outlook,
except Emirates NBD, which was expected to do so soon.
"Strong improvement in asset values and progress on asset
sales has eased concerns on (Dubai World's) ability to repay its
liabilities," EFG said.
However, Bank of America Merrill Lynch analysts said Dubai
World's debt restructuring deal might have been too optimistic
about the money it could fetch from international asset sales.
Sales of the MGM Resorts and CityCenter stakes look vital to
meet the bulk of the May 2015 debt maturity, while the 2018
repayment will probably require Dubai World to sell at least
part of its DP World stake and other assets, BoA calculated.
(Writing by Andrew Torchia; Editing by Sophie Walker)