Dubai Names Emirates Head as Chairman of Dubai World

Sheikh Ahmed Bin Saeed Al Maktoum
Sheikh Ahmed Bin Saeed Al Maktoum, chief executive officer of Emirates Airline. Photographer: Michele Tantussi/Bloomberg

Dubai named Sheikh Ahmed bin Saeed Al Maktoum, head of Emirates airline and uncle of the state’s ruler, as chairman of Dubai World in a board revamp a year after the company said it would halt loan repayments, roiling markets.

The 51-year-old replaces Sultan Ahmed bin Sulayem as head of one of the emirate’s three main state-owned holding companies, the government said in a statement yesterday. Under bin Sulayem, Dubai World’s units racked up $40 billion of debt by building palm-shaped islands off the emirate’s coast, and amassing stakes in companies including luxury retailer Barneys New York Inc. and U.S. casino group MGM Mirage.

Dubai roiled emerging market stocks last year after saying it would delay repayments on $24.9 billion of loans as the emirate’s property market slumped. The emirate and its state-owned companies ran up about $112 billion of debt, according to Barclays Plc estimates, forcing it to restructure some borrowings. Dubai World’s more than 70 creditor banks agreed in October to new debt terms that include repayments of $4.4 billion over five years and another $10 billion in eight years.

“The moves are absolutely necessary and should have been done a year ago,” Christopher Davidson, a professor of Middle East studies at Durham University in the U.K., said in an e-mail yesterday. “Sheikh Ahmed is a solid player in Dubai’s economy, having built Emirates up over many years.”

Emirates Chairman

The younger brother of Sheikh Rashid Bin Saeed Al Maktoum, Sheikh Ahmed was named president of the Dubai Department of Civil Aviation in 1985. That year, he became founding chairman of Emirates, which leased two planes and served three destinations. Today, Emirates is the world’s largest airline by number of international passengers carried.

Sheikh Ahmed was already overseeing the restructuring of Dubai World as member of the emirate’s supreme fiscal committee. The panel also oversees a $20 billion support fund set up in 2009 to assist state-related companies.

“The people calling the shots right now are those that run successful businesses,” Yazan Abdeen, a Dubai-based fund manager who helps oversee $250 million at ING Investment Management (Dubai) Ltd., said in a telephone interview Dec. 12. “It makes investors more comfortable.”

Board Revamp

The government also named a new board for Dubai World that includes Mohammed Ibrahim al-Shaibani, director-general of the Dubai ruler’s court and chief executive officer of Investment Corp. of Dubai; Ahmed Bin Humaid Al Tayer, governor of the Dubai International Financial Centre; Abdulrahman Al Saleh, director-general of Dubai’s Department of Finance; and Hamad Buamin, director general of the Dubai Chamber of Commerce & Industry. Sheikh Ahmed is also head of the Supreme Fiscal Committee, which steers financial decision-making in the emirate. Bin Sulayem remains chairman of DP World.

“Al Tayer, a former minister and now brought back to deal with DIFC’s problems, is another means of bringing international trust back to Dubai World,” Davidson at Durham University said. “Shaibani, the Dubai ruler’s right hand man, enjoys good pedigree from an earlier career in London.”

Sultan bin Sulayem, 55, referred questions to Dubai World. A spokeswoman for Dubai World declined to comment.

“The board change at Dubai World empowers the company to capitalize on the opportunities that lie ahead,” Sheikh Ahmed said in a statement. “Top of the agenda for the new board will be to work with the other boards of the various entities within Dubai World to achieve optimal performance, and to ensure that the value of those assets is suitably unlocked.”

Debt Restructuring

The revamp will help Dubai as it prepares to raise debt, Abdeen said. The cost of protecting the emirate’s debt against default rose 7 basis points this quarter to 444 basis points on Dec. 10, according to prices provided by CMA DataVision. Abu Dhabi’s five-year credit default swaps fell 20 basis points to 94.6 basis points on Dec. 10. Dubai’s benchmark share market index has fallen 0.3 percent in the fourth quarter.

The government has committed at least $15 billion to support Dubai World and Nakheel’s debt restructuring and further $2 billion to Dubai Holding. Dubai World isn’t the only state-owned group to delay repayments on its borrowings.

Dubai Holding Commercial Operations Group LLC, a real- estate and hospitality group owned by Dubai Holding, received a one-month extension on a $555 million revolving credit line until Dec. 30 as it works on a long-term deal with banks. Nakheel PJSC, Dubai World’s former property unit, is also in talks to alter terms on at least $10.5 billion of loans and trade creditor bills.

“This is a page turned for Dubai World,” Dubai-based Ahmad Alanani, head of Middle East fixed-income sales at Exotix Ltd., said in an e-mail Dec. 12. “But that’s not necessarily reflective of an overall improvement in Dubai as a whole as the emirate is still grappling with a massive debt hangover.”

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