Dubai May Sell QE2 Cruise Liner To Repay Debt : Report

The high-profile "trophy asset" of Dubai's boom years - the majestic Queen Elizabeth II cruise liner-  may have to be sold to pay off the emirate's mounting debts, reports Richard Spencer in The Daily Telegraph,
dubai may sell qe2 cruise liner to repay debt...
PTI November 27, 2009 23:43 IST

The high-profile "trophy asset" of Dubai's boom years - the majestic Queen Elizabeth II cruise liner-  may have to be sold to pay off the emirate's mounting debts, reports Richard Spencer in The Daily Telegraph, London.

Dubai World, the state-run company at the heart of a default crisis that has sent shock waves through the global financial system, bought a string of prestige stakes and properties as the city grew.

The team of auditors brought in by the government, led by one of Britain's leading experts in restructuring troubled firms, is to trawl through all the company assets with no options ruled out, a spokesman confirmed on Friday.

The Queen Elizabeth II, the world's favourite cruise liner which was bought by Dubai World's subsidiary Nakheel to be turned into a floating hotel, is among them, he said.

The Telegraph report said Abu Dhabi is giving close scrutiny to 'non-core' assets like the QE2 in the Dubai World portfolio.

Dubai's neighbouring emirate has agreed to lend $5 billion to the support fund that is being used to bail out the city's finances, but is reluctant to see any of that money go to Dubai World until a clear exit from its debt problems has been plotted.

Nakheel bought the QE2 for $100 million in 2007, but by the time it arrived in Port Rashid a year ago this week its future was already looking uncertain. Since then, little has been done to put in place ambitious plans to saw off a funnel in favour of a glass penthouse and refit its suites and ballrooms into a floating hotel.

It is supposed to be heading off for South Africa so that visitors can look round during the World Cup next year, at least bringing in some revenue.

QE2 is just one of a string of assets now held by Dubai World. Leaving aside its port operations and P&O, which it bought in 2005, all of which fall under its DP World subsidiary which is said to be exempt from restructuring, it has stakes in everything from entertainment companies to London apartments.

"I'm sure all of the assets of Dubai World will be reviewed," the spokesman said. "The QE2 is one of them. It's part of the restructuring process, though it's too early to say whether there's any sale in mind."

Nakheel has two hotel chains, one of which owns the Turnberry Hotel. Istithmar World, Dubai World's venture capital arm, has stakes in Barneys, the New York department store, Cirque du Soleil, the South African entrepreneur Sol Kerzner's hotel chain, and Standard Chartered Bank.

The company has also bought into MGM Mirage, the Las Vegas gambling operation - even though gambling is banned in Dubai - and Troon Golf. London properties include Adelphi on the Strand and the Grand Buildings in Trafalgar Square.

Dubai's senior officials are emphasising that progress will be methodical rather than dramatic, but confirmed that Aidan Birkett, the partner of Deloitte's appointed as chief restructuring officer, had assembled a team in the city to start going through the books.

Sheikh Ahmed bin Saeed al-Maktoum, the head of the emirate's finance committee and uncle of its ruler, Sheikh Mohammed, said in a statement on Thursday night that its intervention in Dubai World was "carefully planned" and that more information would be revealed next week.

However, investors will not be reassured that the careful planning did not include informing senior government figures in Abu Dhabi, who were caught as much by surprise as everyone else by the statement revealing the debt crisis on Wednesday night.

Officials remain insistent though that Abu Dhabi will stand by its neighbour, both as an emirate and as the senior partner in the federal government of the United Arab Emirates.

Sheikh Mohammed has previously insisted that Dubai World is a company and not part of the government, which would not necessarily guarantee its debts. Abu Dhabi is now expected to reassure the international markets that default by Dubai World does not imply a wider default that would undermine confidence in the city or the country as a whole.

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