Abu Dhabi Provides $10B Bailout to Dubai

December 14, 2009

(ChattahBox) – Oil-rich Abu Dhabi has stepped up to give $10 billion to its debt-ridden neighbor Dubai to keep its flagship company, Dubai World, afloat through the end of April. Dubai is about $80 billion in debt, with $60 billion of it held by Dubai World. About $4.1 billion of the funds will be used to repay the company’s property developer, whose bond comes due on Monday. The remainder of the funds would be used to keep the company going until the end of April, a period during which it is to undergo a restructuring to ensure its long-term viability.

Abu Dhabi,which controls the UAE’s presidency has directly and indirectly provided Dubai with $25 billion over the past year, mostly by buying Dubai bonds. The conditions surrounding the latest $10 billion bailout are unclear, although on Monday there had been speculation that Dubai would have to hand over prized assets such as Emirates airlines to its neighbor. Dubai has said it intends to set up a new bankruptcy law, effective immediately, similar to the U.S. and British laws, which protect failing companies from creditors. Dubai’s main stock market spiked more than 10 percent on the news.

Source


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