Dubai said on Friday that aid given to Dubai World was on commercial terms, after a report that collateral for further aid was delaying a deal to address the conglomerate's unmanageable debt burden. The Dubai Financial Support Fund (DFSF) has given the company, which is trying to reach a standstill agreement with creditors on delaying $22 billion in debt, about $6.2 billion over the past 12 months and stands ready to provide “considerably more”, a spokeswoman said. “This money was made available to the DFSF on commercially reasonable terms, and the DFSF has endeavored to advance these funds to the company on a commercial basis,” the spokeswoman, who spoke on condition of anonymity said. The government declined comment on a UAE newspaper report on Friday that a DFSF plan to take Dubai World security against future aid was delaying agreement on a standstill, because such a plan would make the DFSF a preferred creditor in the event of an insolvency. Citing unnamed sources, an Abu Dhabi-based newspaper The National said the plan was a “central sticking point in negotiations”. Dubai World rocked global markets on Nov. 25 with plans to request a delay on repaying $26 billion in debt linked to its main property units Nakheel and Limitless World. It staved off default on a $4.1 billion Islamic bond linked to Nakheel after a last-minute bailout from Abu Dhabi. The company has been negotiating with an unofficial seven-member bank coordinating committee but has yet to present a formal proposal on plans to repay the debt. Dubai launched a $20 billion sovereign bond programme in February 2009, with the first $10 billion tranche taken by the central bank. It raised a further $10 billion in November and December from two Abu Dhabi-linked banks and the emirate of Abu Dhabi. The DFSF, set up to disperse proceeds from the program to state-linked firms in need of help, is accountable to a five-man Supreme Fiscal Committee which has overall responsibility for overseeing Dubai's fiscal policies. Dubai World has access to a remaining $4.9 billion of the funds provided by Abu Dhabi - $5 billion in a Dec. 14 bailout, and $5 billion lent by the Abu-Dhabi-linked banks. The financial support, aside from paying Nakheel's bond, will cover working capital and interest expenses.
