London: Creditors of Dubai World are likely
to reject a standstill agreement proposed by the company, a
move which might lead to further "wrangling", media report
"Creditors of Dubai World are expected to reject a
standstill agreement proposed by the company, threatening to
drag out negotiations over USD 26 billion worth of the
conglomerate`s debt," the Guardian said.
Advisers associated in the talks said, the process which
involves 100 accountants, lawyers, bankers and other
professionals could take months.
Quoting sources, the report said "if the standstill is
rejected and a default is triggered, all parties would have to
compromise to reach a restructuring agreement."
Creditors – including UK banks such as RBS and Standard
Chartered, as well as hedge funds – are in a weaker position
as Dubai does not have a creditor-friendly legal environment.
Citing one source the daily said "suing Dubai World, in
Dubai, over Dubai-based assets would be legally very expensive
and would go very slowly".
"Creditors are also unlikely to present a united front –
some might want to swap some debt for assets, holding on to
them in the hope that the market will recover, while others
will want cash," the report said.
Crisis like this generally attracts distressed debt
investors, who usually buy debt at a significant discount with
the view that a restructuring will increase the value of their
debt, or that they could seize some assets.