Large-scale asset sale may be on the cards
DUBAI: Dubai World's debt crisis is likely to result in a large-scale sell-off of assets as varied as the QE2 cruise liner, Turnberry championship golf course, and a raft of properties worldwide.
Mr Paul Reynolds, head of Rothschild's advisory operations in the Middle East, was this week asked to assess the group's assets alongside Mr Aidan Birkett of Deloitte, who was appointed last Wednesday.
A spokesman for the Dubai Department of Finance told Britain's Telegraph newspaper that all options and asset sales would be considered, except for the DP World subsidiary that bought P&O, the British port company.
'I'm sure all of the assets of Dubai World will be reviewed,' he was quoted as saying.
'It's part of the restructuring process, though it's too early to say whether there's any sale in mind.'
Dubai rocked the financial world last Wednesday when it said it would ask creditors of Dubai World, the conglomerate behind its rapid expansion, and Nakheel, builder of its palm-shaped islands, to agree to let it cease payments on billions of dollars of debts until a restructuring agreement has been negotiated.
Abu Dhabi - the richest state in the United Arab Emirates (UAE), the federation to which Dubai belongs - is seen as one of the main buyers of Dubai's assets. Analysts say Abu Dhabi will probably insist on Dubai selling some assets as part of its conditions for rescuing it.
On Sunday, the Abu Dhabi-based UAE central bank moved to quell fears that Dubai's debt crisis could escalate, by promising to provide liquidity for both foreign and local banks that had been expecting repayments, effectively covering any short- term losses.
Last year, when rumours about Dubai's debt problems first surfaced, sources said Abu Dhabi had offered to buy Emirates airline, but Dubai had refused to part with its flagship carrier.
Abu Dhabi is also said to be interested in Emaar, the property company that owns the Burj Dubai skyscraper, the Dubai Mall shopping centre, and Dubai's aluminium company Dubal, the Telegraph reported.
Dubai World's venture capital arm, Istithmar, owns stakes in global assets, including MGM Mirage, the Las Vegas gambling operation; Barneys, the New York department store; Cirque du Soleil; South African entrepreneur Sol Kerzner's hotel chain; and Standard Chartered Bank.
The group's London properties include Adelphi on The Strand and the Grand Buildings in Trafalgar Square.
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A world of big-ticket properties
HIGH-PROFILE assets that Dubai World could be forced to sell:
DP WORLD: The company owns P&O, one of the world's largest port operators and among the crown jewels of Dubai. Its 2007 initial public offering raised almost US$5 billion (S$7 billion), but its share price has since fallen by more than two-thirds.
STANDARD CHARTERED: A 2.7 per cent stake in the bank for about US$1 billion in 2006.
MGM MIRAGE: A US$5 billion investment in casino operator MGM and half of an US$8.5 billion Las Vegas project that has run into delays.
BARNEYS: A luxury retail chain in the United States, bought for US$942 million in 2007, and now near bankruptcy.
PERELLA WEINBERG: A US$100 million investment in this boutique investment bank in 2006.
CIRQUE DU SOLEIL: A 20 per cent stake in this international circus touring company, bought in 2008.
TURNBERRY GOLF COURSE: Bought in 2008 for about US$100 million, it hosted this year's British Open Championship. The Dubai group also owns more than 200 golf courses across the US.
QUEEN ELIZABETH 2 LINER: Bought in 2007 for US$100 million to be converted into a luxury hotel and moored off Dubai's Palm, the ship's future has been under scrutiny since it docked last year for refurbishment.
ATLANTIS DUBAI: The resort, which opened last year to a US$50 million fireworks display, is a joint venture with South African tycoon Sol Kerzner.
EMIRATES: The airline has US$55 billion worth of orders placed with Boeing and Airbus.
DUBAI ALUMINIUM: Set up in 1979 and now one of the world's largest producers and exporters of aluminium.
LONDON STOCK EXCHANGE: A 21 per cent stake in the bourse operator, bought in November 2007.
HSBC: An undisclosed stake in HSBC, made in 2007, that made Dubai World one of the largest investors in Europe's biggest banks.
DEUTSCHE BANK: A 2.2 per cent stake in the German lender bought in 2007 for US$1.83 billion.
EUROPEAN AERONAUTIC DEFENCE AND SPACE COMPANY: A 3.12 per cent stake in Airbus' parent company.
EMAAR PROPERTIES: The Arab world's largest property developer by market value is in the midst of a merger with three other state-linked developers after a failed acquisition in the US and Dubai's real estate market crash left it vulnerable. Its portfolio includes the world's tallest tower, Burj Dubai, and one of the world's biggest malls.
SOURCE: REUTERS
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