Friday, June 4, 2010

Dubai Holding unit posts US$6.2b loss in new hit

DUBAI: Dubai Holding Commercial Operations Group (DHCOG) posted a US$6.2 billion loss for 2009 on Tuesday, June 1 due to Dubai's property crash and said it had access to emergency funding if needed, in the latest setback to the emirate's finances.

DHCOG said it was in talks with banks to roll over debt, was considering asset sales and was renegotiating balances owed to trade creditors after the crash put its cash flow under severe pressure.

DHCOG is a unit of Dubai Holding, the conglomerate owned by the emirate's ruler that belongs to the matrix of firms commonly known as Dubai Inc, which was badly battered by the financial crisis and remains in negotiations with creditors.

Concerns about the overall debt burden of Dubai's state-linked companies mounted after Dubai announced a standstill on repaying US$26 billion in debt as it restructured conglomerate Dubai World. It unveiled a US$9.5 billion rescue plan for the firm in March.

DHCOG had originally delayed reporting its full-year earnings twice, saying in a statement to Nasdaq Dubai in April that the delay was due to complexities in consolidating results of its units.

The company said it restructured its real estate businesses in 2009 and that there was no need to restructure outstanding debt as talks continued with banks to roll over existing facilities. The postponement in reporting earnings had sparked speculation that Dubai Holding could be the latest government-related entity hit by the financial crisis that severely damaged Dubai's property market.

Dubai Holding owns a substantial portfolio of brands, locally and internationally, in the property and hospitality sectors, organised under three major groupings: DHCOG, Dubai International Capital (DIC) and Dubai Group.

DHCOG said in addition that it faced a damage claim of 2.1 billion dirhams from a customer that was pending arbitration.

DIC, the investment arm of Dubai Holding, requested on Thursday a three-month extension on a US$1.25 billion syndicated loan repayment, fueling concerns of more debt troubles to come at Dubai Inc. ' Reuters

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