Mobile  |  About us  |  Photos  |  Videos  |  Subscriptions  |  RSS Feeds  |  Today's Paper  |  Classifieds  |  Contact Us
The Daily Star
01:13 PM Beirut time
22 °C
Blom Index
Middle East
Follow this story Print RSS Feed ePaper share this
Debt-laden Dubai World sells Atlantis hotel to state firm
File - A general view of Atlantis resort is seen in Dubai January 24, 2013. (REUTERS/Mohammed Omar)
File - A general view of Atlantis resort is seen in Dubai January 24, 2013. (REUTERS/Mohammed Omar)
A+ A-

DUBAI: A unit of Dubai World has sold its Atlantis resort, which sits on a palm tree-shaped island in the Gulf, in an asset shuffle between state entities to help the group meet huge debt repayments after a $25 billion restructuring in 2011.

Investment Corp. of Dubai, a holding company that controls some of the emirate’s top firms, has bought the resort from the unit, Istithmar World, for an undisclosed sum, ICD said Thursday.

ICD, which like Dubai World is state-owned, said buying the landmark hotel complex, which is characterized by a giant Arabic-style arch, would help the emirate’s economic development.

“Our acquisition of an asset that is a major contributor to the domestic tourist industry is in line with our overall strategy to support long-term sustainable growth for Dubai,” Khalifa al-Daboos, deputy chief executive officer of ICD, said in the statement.

A spokesman for Istithmar in Dubai declined to comment.

The sale adds to a series of disposals by Dubai World, which had promised to sell noncore assets under the debt-restructuring plan drawn up when the group fell victim to a property market crash in the emirate and the after-effects of the global financial crisis.

Dubai is increasingly juggling assets between its different state firms, allowing cash to be transferred from stronger entities such as ICD to debt-laden ones like Istithmar.

“This strategy is quite creative in that it allows Dubai to keep its prized assets under its government umbrella, while at the same time freeing up liquidity to repay upcoming Dubai Inc. restructured loans,” said Gus Chehayeb, director of credit research at investment firm Exotix in Dubai.

Dubai World needs to repay $4.4 billion in May 2015 under its restructuring terms but its plan to sell assets to meet the payment was hit by unfavorable selling conditions and the fall in valuations since the global financial crisis.

Dubai World’s restructuring plan envisaged it would raise $1.3-$2.3 billion between 2010 and 2012, and another $3.9-$5.3 billion in 2013-15, through sales of holdings such as P&O Ferries and MGM Resorts International.

However, it had to sit on its hands due to a lack of buyers and began offloading parts of its portfolio only this year.

Among the transfers between state entities, Dubai Electricity & Water Authority plans to buy Palm Utilities, a district cooling company owned by Dubai World, according to local media reports last month.

Dubai’s economy is recovering due to renewed investor optimism in its trade, tourism and real estate sectors but the freewheeling emirate still faces debt repayments of about $50 billion over the next three years.

This includes the $20 billion bailout it received from neighboring Abu Dhabi, due in November 2014, which helped Dubai to survive when its debt crisis hit in 2009.

Dubai lacks Abu Dhabi’s great oil wealth and most analysts believe the bailout loan will not be repaid in full in cash. But similar asset transfers, this time between the fellow members of the United Arab Emirates, might offer a solution. The merging of Dubai and Abu Dhabi’s aluminum businesses has already been announced, while a tie-up between the two emirates’ stock markets is being prepared.

“In regards to the recent deals with Abu Dubai, this might also be the only way that Dubai can manage to repay the $20 billion due next year,” Chehayeb said.

Atlantis was set up in 2008 as a joint venture between Istithmar World and Kerzner International. In April 2012, Istithmar acquired Kerzner’s 50 percent stake in the property for $250 million.

Kerzner, run by flamboyant South African hotel mogul Sol Kerzner, sold its Atlantis stake after debt problems of its own forced it into a $2.6 billion restructuring completed in 2012.

The Atlantis sale is Dubai World’s second disposal this year after selling British logistics warehouse developer Gazeley in June. It is also close to selling The Fontainebleau hotel in Miami Beach, Florida.

ICD has holdings in some of the emirate’s most high-profile brands, including Emirates airline, Emaar Properties and lender Emirates NBD.

Istithmar World’s portfolio spans consumer, industrial and financial services, hotels and commercial property sectors. Among its assets are entertainment group Cirque du Soleil and the Mandarin Oriental hotel in New York.

A version of this article appeared in the print edition of The Daily Star on December 06, 2013, on page 5.
Home Middle East
United Arab Emirates

Your feedback is important to us!

We invite all our readers to share with us their views and comments about this article.

Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.

comments powered by Disqus

Baabda 2014
Follow us on Facebook Follow us on Twitter Follow us on Linked In Follow us on Google+ Subscribe to our Live Feed
Pictures of the day
A selection of images from around the world- Tuesday April 15, 2014
View all view all
Rami G. Khouri
Rami G. Khouri
Silencing Ayaan Hirsi Ali’s hate talk
Michael Young
Michael Young
The presidential chess game has begun
David Ignatius
David Ignatius
China moves to the scary side of its boom
View all view all
Click to View Articles
Privacy Policy | Anti-Spamming Policy | Disclaimer | Copyright Notice
© 2014 The Daily Star - All Rights Reserved - Designed and Developed By IDS