Dubai World unwilling to part with 'crown jewels'

Dubai World is looking to hold on to key revenue-generating assets including port operator DP World and its stake in Standard Chartered, but creditors may yet force it to part ways with prized entities.

The troubled state-controlled conglomerate on Monday shed some light on how it planned to restructure $26 billion in debt, including through asset sales, in its first statement since requesting a delay in repaying billions in debt till May 2010. (See: Dubai World to restructure $26 billion debt)

Dubai World Sultan Ahmed Bin Sulayem, Chairmansays the restructuring excludes firms on a "stable financial footing" such as Infinity World Holding, Istithmar World and Ports and Free Zone World, which includes DP World, Economic Zones World, P&O Ferries and Jebel Ali Free Zone (JAFZA) which it said are financially stable, implying its global crown jewels would not be up for grabs, but leaving its battered property firms on the line, reports CNBC-TV18.

"I don't think they're in a position to choose," Khuram Maqsood, managing director of Emirates Capital and a former director at Istithmar was quoted as saying. "Dubai World desperately needs cash. Everything is for sale. I don't think anything is sacred in the current environment."

Bondholders are still reeling from the shock announcement and are unlikely to unanimously agree to the standstill without strong guarantees, especially after the government also distanced itself from the company's troubles on Monday.

The assets of the two property developers in question, Nakheel, which at the end of 2008 had a project portfolio of about $110 billion, and Limitless, are arguably the least interesting to investors. Property prices in the emirate have already fallen some 50 per cent since their peaks last year, transactions are negligible and some analysts see a further 30 per cent decline.