Lenders to Dubai World have asked lawyers to assess their rights over the state-owned company’s trophy overseas assets, which include P&O Ferries and the QE2 cruise liner.
A group of bondholders in Nakheel, Dubai World’s property subsidiary, appointed Ashurst, the London law firm, last Friday to advise them on their options after moves by Dubai to restructure Dubai World’s debt.
The bondholder group, which is led by QVT, the New York-based hedge fund, accounts for more than 25 per cent of the company’s bonds by value.
Ashurst said yesterday that the bondholder group was “in the process of considering its options”, but declined to comment further.
However, a person close to the bondholders told The Times that the lenders had asked Ashurst to examine the legal merits of two separate claims.
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One would enforce the debt against the assets over which the Nakheel bonds extend — primarily property in the Gulf state.
The second possible claim would seek to enforce Dubai World’s parental guarantee on the debt, which could open the way for bondholders to claim against the company’s more valuable assets.
Dubai has tried to ring-fence its healthier assets, including DP World, the ports business that includes P&O.Bondholders were incensed by the Gulf state’s surprise move last week to seek a repayment standstill on Dubai World’s $60 billion of liabilities.
The group of investors could use the threat of legal action against Dubai World’s prize assets in an attempt to gain better financial terms in the restructuring negotiations. Industry insiders predicted that Abu Dhabi, Dubai’s oil-rich neighbour, ultimately would step in to buy out bondholders, albeit at a discount. Distressed debt investors have started to buy up Nakheel’s debt in the secondary markets, gambling on a bailout by Abu Dhabi.
Nakheel’s bank lenders, which include HSBC, have appointed KPMG to advise them. Restructuring experts said yesterday that the value of the property company had fallen so much that the bonds could be worthless and the banks would also have to write off some of their debt.