Dubai World

It is an ill wind that blows no good. I see in a story in the FT yesterday that Aidan Birkett, of Deloitte, has been chosen as the chief restructuring officer at Dubai World.

Dubai World (DW) is an investment company that is essentialy a private contractor for the government of that Emirate, handling a portfolio of businesses for it. DW could cause quite a splash by defaulting on its debts, something that the relevant chunks of the world have worried about since November. Indeed, you might think that no good could come out of the failure of Dubai World with all it would imply.

But, then, Accountancy Age says this is a great opportunity for Birkett and Deloitte. Indeed, it "should provide Deloitte and Birkett with the kind of boost that Lehmans has given PwC – the latest count shows the administration has wracked up £150m in fees." For my fellow Americans, GBP£150m is about USD$232 million. That's how much PricewaterhouseCoopers has gotten on the Lehman deal?

It beats keeping the votes on Oscar nominees safe until some celebrity can get on stage to tear open the envelope.

As for the blow-by-blow on the restructuring, there is this.

Dubai World

The talk this weekend is of Dubai World, the investment company that manages a portfolio of business for the government of Dubai.

Within its portfolio there is Dubai Ports World, the third-largest port operator on the globe, and Nakheel, a real estate developer associated with the Palm Islands.

A timeline:

• Wednesday, November 25, the government announced that the company "intends to ask all providers of financing to Dubai World and Nakheel to 'standstill' and extend maturities until at least 30 May 2010". Thus "standstill" includes payments due for next month.
• Thursday, November 26, the US markets were closed for Thanksgiving. Asian markets took a hit on the news, though, in the wake of reports that some of Japan's bigest banks were heavily exposed to Dubai World.
• Friday, November 27, Markets in the US started down big, but seemed to discount the significance of thre news as the day went on.
• Saturday, November 28, The National, an English language paper based in the United Arab Emirates, reported that Dubai World "could still meet the December 14 deadline on the US$4 billion ... payment of a sukuk from Nakheel under one option being considered by advisors to the conglomerate." It is also considering an 80% redemption offer.

Today, the UAE's central banks is making reassuring noises about "standing behind" that country's banks.

One intriguing feature of the situation involves the sukuk bonds involved. Any default, or lesser "credit event" here will compound some of the uncertainties I discussed on May 19 in this blog.