Dubai World is planning to raise as much as $19.4 billion by selling off prized assets over a period of eight years to pay off creditors burned by its overambitious expansion, according to a document obtained by Reuters on Wednesday.   

The state-owned conglomerate told creditors at a July 22 meeting, held at Dubai's lavish Atlantis Hotel, that its capital structure was inappropriate and needed 'urgent' restructuring, according to the document handed out at the meeting.

Dubai World, the conglomerate with investments in global luxury hotels to theme parks, said in the document asset disposals over an eight-year period will help generate up to a maximum of $19.4 billion, while similar sales based on current prices would be worth a maximum of $10.4 billion.

It projected mid-point disposal proceeds of $17.6 billion. 'DW (Dubai World) lender recoveries (will be) significantly enhanced if DW is given time to rebuild and realise value over a five to eight year horizon,' the document said.

Also, in a sign of the deep overhaul that Dubai World has committed to, the company will appoint a new managing director and chief financial officer.
   
However, Aidan Birkett, the officer-in-charge of its restructuring will remain in place until December.   

Dubai World is restructuring billions of dollars in debt. The government has agreed to take a hit on its claims against the firm, leaving $14.4 billion in bank debt outstanding.   

The company's plans involve repayment over five to eight years, with interest of between 1 percent to 3.5 percent.

Dubai World's document shows the company proposed to dispose of its 'investment assets', including its stakes in luxury retailer Barney's, Dubai-based Atlantis Hotel, a lavish pink palace perched at the seaward tip of its island development and casino operator MGM Resorts International, over a period of five years.

Dubai World's private equity arm, Istithmar which owns most of the overseas assets, is expected to raise up to $4.5 billion over a five year period. 

It has identified ports operator DP World, Jebel Ali Free Zone and Dubai Maritime City (DMC) and Dry Docks World as its 'strategic assets' which may generate up to $11.8 billion when put on sale over a period of eight years.

'It appears Dubai World's debt is higher than we thought and this will have repercussions for investor confidence -- it's more negative news coming out of the UAE and means investors will continue to stay away from the country's stock markets.' said Shakeel Sarwar, head of asset management, Sico Investment Bank in Bahrain.  

 'Throughout this entire episode, transparency and disclosure have not been as good as investors would have expected -- even if Dubai World's problems were bigger than we thought, the market would have acknowledged an improvement in openness.'     

Sarwar said Dubai World's projection that asset valuations could nearly double in eight years was feasible, providing the emirate improved transparency, which will be crucial to attracting foreign money.

'Global investors have many attractive destinations to choose from and Dubai is competing with these -- unlike Kuwait or Saudi Arabia, Dubai relies on foreign investment.    

'An assumption that asset prices will double in eight years is not too optimistic, because they have fallen 50 to 60 percent, but if Dubai continues to be non-transparent then the situation will be prolonged.'  -Reuters