Date Announced: 03/23/2011
client: Government of Dubai
Status: Closed – 03/2011
Value: $24.9 billion Read the case study
Moelis & Company advised the Government of Dubai on the $24.9 billion restructuring of Dubai World, as well as the $23.7 billion restructuring of Nakheel.
Dubai World’s rapid expansion started in early 2005 with a large number of debt-financed acquisitions and investments of companies and real estate projects across the world. Dubai World’s wholly owned subsidiary Nakheel, the largest real estate developer in Dubai, witnessed a period of unprecedented growth in property prices and excessive speculative activity. By the end of 2008, Dubai World and Nakheel had significant levels of financial and non-financial liabilities on their respective balance sheets totaling $49 billion. The highly complex capital structure included over 100 financial institutions and more than 65 different debt tranches comprising a mix of Islamic and non-Islamic financing.
A combination of excessive leverage, the collapse in Dubai’s real estate market and the tightening of international liquidity markets led the Government of Dubai to announce a six-month “standstill” for Dubai World and Nakheel debt obligations on November 25, 2009. Moelis & Company secured the role as exclusive financial advisor to the Government of Dubai on the $24.9 billion restructuring of Dubai World and the $23.7 billion restructuring of Nakheel. One week later, the Government of Dubai formally announced the need to restructure its liabilities at Dubai World and Nakheel, marking the beginning of the Dubai World restructuring process.
Moelis & Company was instrumental in establishing the UAE’s first insolvency reorganization regime (“Decree 57”) which was a hybrid of a US Chapter 11 Bankruptcy Code and a UK Scheme of Arrangement. This regime underlined the need to protect Dubai World and its subsidiary assets from aggressive foreign creditor actions. Importantly, it provided the ability to maintain jurisdiction in the UAE, if required, allowing the Government of Dubai to retain full control of the restructuring process. Following the establishment of this new insolvency regime, Moelis & Company played a key role in raising $10 billion of financing from the Abu Dhabi Government to support the Dubai World and Nakheel restructuring plans.
The Dubai World restructuring achieved over 99% lender consent in nine months, reaching 100% in 11 months, and the transaction successfully closed in June 2011. It was followed by the closing of the Nakheel restructuring in August 2011. Moelis & Company successfully advised the Government of Dubai on tactics and strategies in dealing with an array of stakeholders including banks, trade contractors and foreign governments.