The Dubai government today (Thursday) announced plans to inject about $9.5 billion into state-owned holding company Dubai World to restructure its debt.
The additional funds double to $20 billion the amount the government will pay to the emirate's holding company. Dubai World is seeking to renegotiate $23.5 billion in debt with creditors. The company said it owed $14.2 billion to lenders other than the government at the end of 2009. The government asked creditors to wait eight years to get all their money back.
Dubai World, and its real-estate development arms, in November shocked investors when it announced it would seek to delay repaying its debt until May. The announcement sent developing-nation stocks plummeting and doubled the cost of buying insurance against a default.
Dubai, the second largest of seven states that make up the United Arab Emirates, and its state-owned companies ran up $80 billion in debt through 2008 to transform the sheikhdom into a tourism, trade and financial hub.