26 Mar 2010

Dubai government bails out investment company

6:00 am on 26 March 2010

The government in Dubai has announced a multi-billion dollar rescue package for the state-controlled investment company Dubai World.

Major creditors are also being asked to wait for up to eight years before they'll get their money back.

Dubai World stunned global markets in November last year when it asked for a six-month delay on debt repayments, the BBC reports.

It was hit hard by the financial crisis, especially its property operation Nakheel, with such high profile projects as a palm-shaped residential island.

The government will provide $US9.5 billion in funding to help the company restructure its debt.

The investment firm has presented a plan to restructure $US23.5bn of debt to its creditors, including converting $US8.9bn of government debt into equity.

Creditors will now decide on whether to accept the plan.