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Dubai Group sees $10 billion restructuring in six weeks

By Mirna Sleiman

DUBAI (Reuters) - Dubai Group, an investment vehicle owned by the emirate's ruler, will become an independent company after its planned $10 billion debt restructuring, a top official said.

The company, which is a unit of Dubai Holding, the investment arm of Sheikh Mohammed bin Rashid al-Maktoum, expects to sign an agreement with its creditors on the restructuring in six weeks, said Ahmad Bin Byat, chief executive of Dubai Holding.

"We expect the deal to be signed within six weeks. The term sheet is now approved by the core creditors committee and is being circulated to the credit committee," Bin Byat told Reuters on Thursday.

The proposed Dubai Group deal is the last big debt restructuring related to the emirate's 2008-2009 financial crisis that has not yet been agreed. Complex talks on the deal have dragged on for over three years.

On Wednesday, sources familiar with the matter told Reuters that unsecured creditors had been sent final restructuring documents, and that agreement was expected to be reached between banks and Dubai Group by June 6.

After the restructuring, Dubai Group's board will include representatives from creditor banks and shareholders, as well as independent members, Bin Byat said.

The proposal includes asset sales, though Dubai Group does not expect to dispose of any of its major assets this year, he said. Assets include a 14.7 percent stake in Oman's top lender, Bank Muscat , and 18 percent of Egypt's EFG Hermes . Dubai Group also owns part of Borse Dubai , which holds 20.6 percent of the London Stock Exchange.

Dubai Group's creditors are being asked to extend their obligations for between 3.5 and 12 years, depending on the assets secured against their exposure, to allow the company's assets to recover in value before divestment.

For unsecured creditors, who have been offered a 12-year extension, there is an option to be repaid after five years, albeit at a discount.

The restructuring would see Dubai Group's debt removed from the balance sheet of parent Dubai Holding.

"As of yesterday, the debt was on Dubai Holding's books. But once the agreement is signed, I can say as of today, $10 billion debt is off our books and will be carried by the owners of Dubai Group," Bin Byat said.

"Dubai Group still has to pay Dubai Holding $4 billion of internal debt, and that's why we will be sitting on the board along with creditors. Dubai Group will remain at arm's length."

(Writing by Dinesh Nair; Editing by Andrew Torchia)

(This story is refiled to remove reference to creditors taking equity stake after company corrects earlier statement, and says creditors will not receive any equity)

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