By David French
DUBAI, March 5 (Reuters) - Dubai World, one of the emirate’s big state-owned conglomerates, has prepaid $284.5 million to creditors under its $25 billion debt restructuring plan, sources familiar with the matter said on Wednesday.
The conglomerate obtained money for the prepayment from asset sales, said the sources, who declined to be named because the matter isn’t public.
Under the terms of the restructuring deal, cash raised from asset sales above a threshold of $300 million is to be distributed as early repayments to creditors, which include big Western and Gulf banks, one source said.
A Dubai World spokesman declined to comment.
The debt problems of Dubai World, which holds financial and corporate assets across the world, symbolised the emirate’s 2009 financial crisis. The early repayment is a sign that so far at least, efforts to resolve those problems are working.
“It’s a drop in the ocean in terms of the overall amount of debt, but it’s a step in the right direction,” a source at a creditor bank told Reuters.
Under its restructuring plan, Dubai World is to repay creditors in full over coming years by selling assets which it bought at peak prices in 2006-07. The plan includes a $4.4 billion loan maturity in May 2015.
Last December, a unit of Dubai World sold its 50 percent stake in Miami Beach’s landmark 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.
Last month Dubai’s state-owned property developer Nakheel , another firm that was hit hard by the financial crisis, said it was repaying 2.35 billion dirhams ($640 million) of bank debt 18 months ahead of its maturity in September 2015.
Dubai’s crisis was triggered by the bursting of a bubble in its property market, but local real estate prices and the economy are now recovering strongly, helped by an influx of foreign money.