Tuesday, July 10, 2012

RBS, Other Banks Quit Talks On Dubai Group Debt Restructuring


Tue., July 10, 2012
Royal Bank of Scotland and two other banks have abandoned talks on restructuring Dubai Group’s $10bn debt and threatened to bring unprecedented legal action against the investment vehicle of Dubai’s ruler, sources close to the matter said, Gulf Times reported on a Reuters story. The walkout by RBS, German lender Commerzbank and South Africa’s Standard Bank at the beginning of June could prevent a deal for the entire restructuring just as an initial agreement is about to be circulated to other banks, five sources said. They said the three banks had walked away and were threatening legal action to demand immediate payment, unprecedented in an emirate where banks have tended to take the best terms on offer due to the legal hurdles and to avoid jeopardising chances of winning future business. “We are no longer negotiating. We have asked for our money back or we will go to the courts under the terms of the contracts we signed,” said a banker at one of the lenders, speaking on condition of anonymity. RBS had been co-chair of the creditor committee representing banks with either little or no security tied to their cash. All three banks were part of this group of creditors, the largest of three groups negotiating with Dubai Group, a unit of Dubai Holding, the personal investment arm of Dubai’s ruler. A spokeswoman for RBS confirmed the part-nationalised British lender had given up its role on the creditor committee, but did not give further details of its position. “This decision was not taken lightly as RBS has a strong track-record of supporting restructures in the region, but a number of factors beyond our control have led us to consider other options in this case,” she said. Dubai Group said it didn’t comment on private negotiations but said it “remains fully committed to reaching a consensual agreement with all key stakeholders and believes that this remains an achievable objective.” A document detailing the terms of a proposed restructuring was signed by the mainly-unsecured creditor committee last Tuesday and was due to be put to all those creditors this week, three sources said. It is the first time an agreement has been reached between the company and its 44 creditor banks since Dubai Group missed two debt repayments in late 2010, precipitating restructuring talks. Most banks are from the Gulf and Egypt, but they also include France’s Natixis.

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