DOCSLIB.ORG

Dubai World Fends Off Global Financial Crisis

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Dubai World Fends Off Global Financial Crisis Reprinted from ACQUISITIONS MONTHLY December 2010 © Thomson Reuters aqm-e.com RESTRUCTURING DUBAI WORLD FENDS OFF GLOBAL FINANCIAL CRISIS he global financial crisis caught up The key to the transaction was the 0 Martinsa Fadesa, the real estate with the Middle East when in early recognition by all stakeholders that company, which at €7bn became Spain’s November 2009 the Government the company needed time to rebuild asset largest in-court restructuring ever; T of Dubai announced a request for value and execute an orderly realisation a six-month standstill from of assets to repay debt. With the Govern- 0 Panrico, the Spanish pastry producer lenders to industrial conglomerate Dubai ment of Dubai committing substantial acquired by Apax for €880m in 2005, but World and its real estate development sub- new funds negotiations with lenders pro- which is now in the hands of the lenders; sidiary Nakheel, which owed a combined gressed relatively quickly and principle eco- total of US$26bn to 93 local and interna- nomic terms were agreed with the Dubai 0 Bodybell, the Spanish beauty products tional banks. Ranks of bulldozers, employed World Co Com within six months of the cri- retailer impacted by reduced consumer to develop Dubai, were left sitting idle. sis breaking. spending, which required a comprehensive For a while the crisis took on sovereign Financing of US$10bn from UAE neigh- balance sheet restructuring; dimensions, with Dubai’s government under bour Abu Dhabi helped smooth the deal, pressure to give untenable debt guarantees, which was agreed by all lenders in October 0 Stabilus, the €450m-indebted German fears of contagion across the economy 2010. Transaction subject to documentation maker of gas springs, which was heavily and banking system of the United Arab Emi- with completion expected in early 2011. exposed to the automotive sector rates, and the reputation of Dubai as a finan- Other notable restructuring deals in downturn and was restructured without cial hub and celebrity lifestyle destination at progress or completed in 2010 include: resorting to a debt-for-equity swap, but by stake. using a profit participating loan structure; Deloitte acted as chief restructuring officer 0 Oerlikon, the publicly listed Swiss con- and adviser to Dubai World and Nakheel glomerate, affected by severe cyclical 0 Fleet Street Finance Two, a €3.5bn CMBS alongside Rothschild and Clifford Chance. downturns across its business divisions, structure where the underlying assets were Moelis & Company and Latham & Watkins which achieved a SFr1.3bn reduction in net the department stores of Karstadt, were advisers to the Government with KPMG debt; Germany’s largest department store chain and Allen & Overy advising the lenders. and largest corporate insolvency ever; The deal became the largest and most com- 0 Activis, the Icelandic-Bulgarian generic plex EMEA restructuring of 2010, sorting pharmaceuticals company (the fifth-largest 0 Wind Hellas, at €3.7bn, the largest pre- out a mismatch of short-term debt maturities such business in the world), which with packaged administration for the third against long-term asset profiles. Crucial to the more than of €5bn indebtedness was largest mobile telecommunications deal’s success was the separation of Nakheel, Europe’s largest hung LBO; business in Greece. where the operational problems and sys- temic, local liabilities were more critical, 0 CenterParcs, the UK short-break 0 Borsodchem, the €1bn Hungarian from Dubai World, which contained a health- holiday park provider, which became the chemicals maker, hit by a severe cyclical ier mix of global infrastructure and private first European consensual CMBS restruc- downturn, which required new money and equity assets. turing; a balance sheet restructuring. Restructuring deal of the year: Dubai World.
Load more

Recommended publications
  • Global Financial Crisis and Its Effects on the Crisis in Dubai
    British Journal of Humanities and Social Sciences 71 February 2012, Vol. 4 (1) Global Financial Crisis and its Effects on the Crisis in Dubai *Dr. Fares Jamil Alsufy Department of Accountancy Al isra University, 22 Jordan – Amman 11622 **Dr. Mae'n A.R Juwaihan Law Department Al isra University, 22 Jordan - Amman 11622 *** Dr. Awad Ako irshedah Law Department Al isra University, 22 Jordan - Amman 11622 Introduction: - With the progress of science and technology development and information in the presence of the Web is the world together where he became an economic bloc interrelated and complex, affecting any economic event in a particular area on a number of regions and economic centers in the world the sense of the interdependence of interests of businessmen in Britain and the United States of America with a group the huge investments in the region such as Dubai may affect any economic event in one of the countries mentioned have a direct and tangible in the other country, whether the event recovery or recession, the birth of companies and major facilities or the collapse of another, so that the influence on the other directly, but no one guess the kind of impact a positive or negative. Problem of the study: - The problem of the study in the misuse and interpretation of financial statements and the lack of credibility of the information given by the departments of large companies and this in itself is a weakness in the global management system that puts the region in a serious financial situation. In addition, the weakening of the policy of lending and lack of caution by banks and private real estate which is enough and the absence of objectivity in the process of assessing the mortgaged properties, which have been inflating their values in an exaggerated manner, causing it to drain liquidity from the banks and the inability of borrowers to repay and which led turn to the collapse of the plight of banking sector_ economy column in any country_.
    [Show full text]
  • Prospects for the Dubai Real Estate and Hospitality Sectors July 2020
    Post-pandemic plans for concrete recovery Prospects for the Dubai real estate and hospitality sectors July 2020 FOREWORD The Covid-19 pandemic is proving Based on KPMG’s experience in the real estate and hospitality sectors, and conversations with an enormous challenge for our stakeholders, we have analyzed the current societies and healthcare systems; the situation. As a product of our research, this consequences for the global document seeks to offer insight into the challenges faced within the residential, office and local economies are both and mall segments of the real estate market, unprecedented and unpredictable. as well as the hospitality industry. Many economists are convinced we are heading We would like to thank those who provided for a significant economic downturn and remain invaluable insight, while rising to the challenges unsure as to how long a recovery will take. we are all currently experiencing. However, responses from governments and regulatory bodies have been prompt. In the Please feel free to contact us with UAE, at the federal and emirate levels, a variety any comments or queries. of measures have been taken to support the economy and its citizens. Sidharth Mehta Partner Head of Building, Construction and Real Estate KPMG Lower Gulf Limited E [email protected] CONTENTS Residential Page 06 Office space Page 09 Hospitality sector Conclusions Executive summary Regional outlook Real estate sector Page 14 Page 01 Page 02 Page 05 Page 18 Shopping malls Page 11 About KPMG Page 20 Real estate and hospitality services Page 20 References Page 21 — A significant reduction in personal and — How deeply the sector is affected will largely business travel is impacting the sector with depend on travel restrictions and traveler HIGHER occupancy and revenue per available room sentiment.
    [Show full text]
  • The World Economy Today
    THE WORLD ECONOMY TODAY: Major Trends and Developments First Edition 1 2 THE WORLD ECONOMY TODAY: Major Trends and Developments First Edition Joint publication, comprised of selected works of renowned scholars and experts representing: University of Antwerp, Belgium Bond University, Australia Center for Education, Policy Research and Economic Analysis ALTERNATIVE, Armenia Delft University of Technology, Netherlands Zhejiang Gongshang University, China International Monetary Fund, HQ in Washington D.C., USA University of San Francisco, USA Shinawatra International University, Thailand United Nations University, Belgium Yerevan State University, Armenia 3 Liliane Van Hoof, Ph.D., Professor of International Business Evrard Claessens, Professor of Economics L. Cuyvers, Professor of International Economics, Stijn Verherstraeten, Research Assistant Céline Storme, Industry Management Consulting Liesbeth Van de Wiele, Consultant Philippe Van Bets, MBA at University of Antwerp Michel Dumont, Ph.D., Assistant Professor of Economics of Innovation at Delft University of Technology P. De Lombaerde, Associate Director at United Nations University Rosita Dellios, PhD, Associate Professor of International Relations at Bond University, Gold Coast, Australia Ararat Gomtsyan, Ph.D., Senior Analyst, Armen Safaryan, Ph.D., Senior Analyst Tamara Grigoryan, MBA, Senior Analyst at Center for Education, Policy Research and Economic Analysis ALTERNATIVE, Armenia 4 Guillermo Tolosa, IMF Resident Representative to Armenia International Monetary Fund, Headquartered
    [Show full text]
  • Iconographic Architecture As Signs and Symbols in Dubai
    ICONOGRAPHIC ARCHITECTURE AS SIGNS AND SYMBOLS IN DUBAI HARPREET SETH Ph.D. UNIVERSITY OF WOLVERHAMPTON 2013 i ICONOGRAPHIC ARCHITECTURE AS SIGNS AND SYMBOLS IN DUBAI By Harpreet Seth B.Arch., M.Arch. A thesis submitted in partial fulfillment of the requirements of the University of Wolverhmapton for the degree of Doctor of Philosophy School of Technology (STECH) Department of Architecture and Design University of Wolverhampton February 2013 This work or any part thereof has not previously been presented in any form to the University or to any other body whether for the purpose of assessment, publication or for any other purpose (unless otherwise indicated). Save for any express acknowledgements, references and/or bibliographies cited in the work, I confirm that the intellectual content of the work is the result of my own efforts and no other person. The right of Harpreet Seth to be identified as the author of this work is asserted in accordance with ss.77 and 78 of the Copyright, Designs and Patents Act 1988. At this date copyright is owned by the author. Signature (Harpreet Seth) Date 16 / 03/ 2013 Mrs. Harpreet Seth (M.Arch.) Iconic Architecture in Dubai as Signs and Symbols February 2013 ii Abstract This study seeks to investigate the impact of architectural icons on the cities that they are built in, especially those in Dubai to understand the perceptions and associations of ordinary people with these icons, thus analysing their impact on the quality of life in the city. This is an important study with the advent of ‘iconism’ in architecture that has a growing acceptance and demand, wherein the status of a piece of architecture is predetermined as an icon by the media and not necessarily by the people.
    [Show full text]
  • The Dubai Logistics Cluster
    THE DUBAI LOGISTICS CLUSTER Alanood Bin Kalli, Camila Fernandez Nova, Hanieh Mohammadi, Yasmin Sanie-Hay, Yaarub Al Yaarubi MICROECONOMICS OF COMPETITENESS COUNTRY OVERVIEW The United Arab Emirates (UAE) is a federation of seven emirates, each governed by its own monarch. The seven Emirates - Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm al-Quwain - jointly form the Federal Supreme Council, which chooses a president every five years. Since independence from Britain in 1971, the ruler of Abu Dhabi has been elected as the president, while the ruler of Dubai has been elected as the Vice President and Prime Minister. Abu Dhabi serves as the capital and each emirate enjoys a high degree of autonomy. The country is strategically located in the Middle East, bordering the Persian Gulf, the Arabian Sea, Oman and Saudi Arabia. It occupies a total area of 83,600 km2 with around 1,318 km of coastline1. The population is estimated to be 9.3 million in 2015 with only 13% nationals2. UAE Economic Performance The UAE is an oil rich country, with most of its oil and gas production coming from Abu Dhabi. The country was ranked eighth worldwide in terms of oil and gas production in 2012 and seventh in terms of reserves3. Since the UAE’s establishment, oil revenues have been used strategically to develop basic infrastructure and provide UAE citizens with government services including subsidized utilities, free education, and medical services. As a result of oil price fluctuation, the country has understood the importance of diversifying away from this resource and started to develop its petrochemical sector.
    [Show full text]
  • The Elusive Dubai Lessons in Planned Development for Fast Growing Cities
    The Elusive Dubai Lessons in planned development for fast growing cities A thesis submitted to the Graduate School of The University of Cincinnati in partial fulfillment of the requirements for the degree of Master of Community Planning in the School of Planning of the College of Design, Art, Architecture and Planning by Venkata Krishna Kumar Matturi B.Arch. Indian Institute of Technology, Kharagpur June 2012 Committee Chair: Mahyar Arefi, Ph.D Committee Member: Udo Greinacher, M.Arch Abstract Increase in urbanization through globalization and population explosion has resulted in rapidly growing cities in the past few decades. Driven by market forces and moneyed interests, cities are placing larger emphasis on economic development. This increasing trend had resulted in a dramatic change in urban morphology and vernacular urban fabric is being replaced by a ‘global urban form’ that has become a commonplace around the world. Dubai, a regional financial hub and a global city, rose to prominence in a matter of few decades. Started as a mere fishing village, it has managed to modernize and build itself to global prominence. Its meteoric rise has resulted in a dramatic transformation in its physical form through single minded determination and careful planning. This research explores the impact of rapid growth on Dubai's urban form and its implications on creating an ‘Elusive Dubai’. This research also investigates the phenomenon of elusiveness in major land uses of Dubai through the analysis of surveyed data collected prior to this research. Furthermore, it attempts to draw lessons for planned rapid urban growth in cities through Dubai’s model of urbanization.
    [Show full text]
  • Copyrighted Material
    apter On Ch e What Happened?? What Happened!! WHEN The Little Book That Saves Your Assets first ap peared in 2008, how little did any of us anticipate the steep andhttp://www.pbookshop.com scary roller-coaster ride that was about to be experienced by economies, companies, financial markets, banks, governments, savers, workers, and retirees! ThroughoutCOPYRIGHTED 2008, crashing markets, MATERIAL widespread layoffs, loan losses, asset value write-downs, accelerated news flow, and extreme volatility severely tested the nerves, resources, patience, sanity, and resolve of investors, cc01.indd01.indd 1 220/09/120/09/12 88:50:50 AAMM [2] LITTLE BOOK THAT S TILL SAVES YOUR ASSETS regulators, CEOs, politicians, and mainstream citizens in the United States and all over the world. And in March 2009, just when it seemed as if the glo- bal economy was about to plunge even deeper into the abyss, governments acted, markets rallied, and economies stabilized somewhat. A back-and-forth, halting, faltering resuscitation began, although quite anemic compared to previous recoveries. Even today, disagreement persists as to whether a fi nal bottom has been reached and a multi- year secular bull market can begin to unfold. Such a sce- nario appears unlikely until: (1) debt and leverage are brought down to manageable levels; (2) politicians coop- eratively and central bankers resolutely pursue policies to address imbalances (of savings, consumption, defi cits, indebtedness, societal entitlements, and currency values); (3) outmoded patterns of thinking and behavior adjust to the new realities of technology, globalization, and demo- graphics; and (4) meaningful structural reforms begin to be implemented.http://www.pbookshop.com At times during the past several years, it has seemed as if the wheels were coming off the car of the global economy.
    [Show full text]
  • Renewable Energy in the GCC Countries Resources, Potential, and Prospects
    Renewable Energy in the GCC Countries Resources, Potential, and Prospects Renewable Energy in the GCC Countries Resources, Potential, and Prospects Imen Jeridi Bachellerie Gulf Research Center The cover image shows the Beam Down Pilot Project at Masdar City. Photo Credit: Masdar City Gulf Research Center E-mail: [email protected] Website: www.grc.net First published March 2012 Gulf Research Center © Gulf Research Center 2012 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the Gulf Research Center. ISBN: 978-9948-490-05-0 The opinions expressed in this publication are those of the author alone and do not necessarily state or reflect the opinions or position of the Gulf Research Center or the Friedrich-Ebert-Stiftung. By publishing this volume, the Gulf Research Center (GRC) seeks to contribute to the enrichment of the reader’s knowledge out of the Center’s strong conviction that ‘knowledge is for all.’ Dr. Abdulaziz O. Sager Chairman Gulf Research Center About the Gulf Research Center The Gulf Research Center (GRC) is an independent research institute founded in July 2000 by Dr. Abdulaziz Sager, a Saudi businessman, who realized, in a world of rapid political, social and economic change, the importance of pursuing politically neutral and academically sound research about the Gulf region and disseminating the knowledge obtained as widely as possible. The Center is a non-partisan think-tank, education service provider and consultancy specializing in the Gulf region.
    [Show full text]
  • The Rise of Dubai, Singapore, and Miami Compared "2279
    sustainability Article A Tale of Three Cities: The Rise of Dubai, Singapore, y and Miami Compared Alejandro Portes 1,2 1 School of Law, University of Miami, Coral Gables, FL 33146, USA; [email protected] 2 Center for Migration and Development, Princeton University, Princeton, NJ 08544, USA Revised and updated version of an article by Portes and Martinez published in the Spanish Sociological Review y 28 (3): 9–21. Received: 17 September 2020; Accepted: 9 October 2020; Published: 16 October 2020 Abstract: The literature on “global cities”, following a publication by Saskia Sassen of a book under the same title, has focused on those prime centers of the capitalist economy that concentrate on command-and-control functions in finance and trade worldwide. New York, London, Tokyo, and sometimes, Frankfurt and Paris are commonly cited as such centers. In recent years, however, another set of mercantile and financial centers have arisen. They reproduce, on a regional basis, the features and functions of the prime global cities. Dubai, Miami, and Singapore have emerged during the first quarter of the XXI century as such new regional centers. This paper explores the history of the three; the mechanisms that guided their ascent to their present position; and the pitfalls—political and ecological—that may compromise their present success. The rise of these new global cities from a position of insignificance is primarily a political story, but the stages that the story followed and the key participants in it are quite different. A systematic comparison of the three cities offer a number of lessons for urban scholarship and development policies.
    [Show full text]
  • World Business Academy by the Economic Forecast Committee Of
    World Business Academy Rekindling the Human Spirit in Business By the Economic Forecast Committee of the World Business Academy EconForecast is a publication for subscribers, Members, and Fellows of the World Business Academy. It presents a 12-month rolling economic forecast and a macro- economic analysis of social and political conditions throughout the world. The Economic Forecast Committee of the World Business Academy includes econ- omists, business executives, academics, and others who collaborate to create this report by consensus. This issue was derived from a meeting that took place De- cember 1, 2009. World Business Academy OVERVIEW For more than a year, the Academy has correctly predicted that the global re- cession would end in the third quarter of 2009. It ended due to the cumulative economic activity of China, Southeast Asia, Brazil, the United States, Europe, and Australia. We still do not see a double dip recession, but rather a gradual L-shaped recovery based on solid fundamentals. In hindsight, this economic crisis was more severe than the Great Depression, which was largely confined to the Western industrialized countries. The De- pression collapsed the real economy but not the financial system. Now that the world has a truly global economic system, the crisis reached around the world. Policymakers had to revive the real economy and the financial system in tandem, a much more difficult challenge. The pervasive nature of the crisis created its own self-fulfilling fear as people worried that if it could not be fixed everywhere, it could not be fixed anywhere. The upside of post-crisis events is that after the fall of Lehman Brothers, govern- ments responded to frozen credit markets in a timely fashion with enormous stimulus packages and liquidity injections that created enough of a floor under economic activity to avoid an economic Armageddon.
    [Show full text]
  • Financial Crisis: Dubai Bubble Burst
    Financial Crisis: Dubai Bubble Burst By Washington's Blog Region: Middle East & North Africa Global Research, November 30, 2009 Theme: Global Economy Washington's Blog 27 November 2009 You know about Dubai’s economic crisis. But do you know the background to – and fallout from – the crisis? A Brief History Historically, Dubai had an oil-based economy. But because Dubai’s oil reserves were declining, the government – led by Sheikh Muhammed Al Maktoum – decided to diversify into other areas, especially tourism and commerce. See this and this. That’s why Dubai built the world’s only 7 star hotel, a series of luxury islands, and the world’s largest tower. But the global property bubble is bursting. As I wrote last December: Housing bubbles are now bursting in China, France, Spain, Ireland, the United Kingdom, Eastern Europe, and many other regions. And the bubble in commercial real estate is also bursting world-wide. See this. But Dubai got hit the hardest. As Bloomberg notes: Dubai suffered the world’s steepest property slump in the global recession, with home prices dropping 50 percent from their 2008 peak, according to Deutsche Bank AG. As the CBC notes, things went South quickly in Dubai: Hundreds of billions of dollars worth of building projects were delayed or cancelled. Thousands of jobs disappeared. Dubai, playground of the über-extravagant, suddenly found itself facing the very real possibility that its biggest state-owned company, Dubai World, could go into bankruptcy. It warned it was having trouble making debt payments on $59 billion US — money borrowed to pay for all the excess.
    [Show full text]
  • FRASCA-THESIS.Pdf (2.303Mb)
    Copyright by Alexandra Marguerite Frasca 2011 The Thesis Committee for Alexandra Marguerite Frasca Certifies that this is the approved version of the following thesis: Dubai, Debt, and Dependency: The Political and Economic Implications of the Bailout of Dubai APPROVED BY SUPERVISING COMMITTEE: Supervisor: Clement Henry Sanford Leeds Dubai, Debt, and Dependency: The Political and Economic Implications of the Bailout of Dubai by Alexandra Marguerite Frasca, B.A. Thesis Presented to the Faculty of the Graduate School of The University of Texas at Austin in Partial Fulfillment of the Requirements for the Degrees of Master of Arts and Master of Business Administration The University of Texas at Austin May 2011 Abstract Dubai, Debt, and Dependency: The Political and Economic Implications of the Bailout of Dubai Alexandra Marguerite Frasca, MA; MBA The University of Texas at Austin, 2011 Supervisor: Clement Henry The goal of this thesis is to identify the main political and economic implications of Dubai’s debt crisis and subsequent bailout by her wealthier and more powerful sister emirate Abu Dhabi. This paper examines the implications of the bailout of Dubai on two levels: Dubai’s relationship with Abu Dhabi and Dubai’s relationship with the international investment community. The paper first provides a brief background on Dubai, one of the seven emirates that make up the United Arab Emirates (UAE), and discusses Dubai’s key characteristics that helped give Dubai her nickname Dubai Inc. – an opportune location, the Al-Maktoum ruling family, and state-led entrepreneurship. It then discusses Dubai’s historically competitive relationship with Abu Dhabi and Dubai’s push to diversify economically away from oil.
    [Show full text]