Shifting sands – Deloitte tackles Dubai World

Has there ever been a restructuring job like it? Aidan Birkett, managing
director of Deloitte’s corporate finance team, is now the chief restructuring
man on the £36bn debt owed by Dubai World, the chief holding company for the
most developed real estate in the Gulf.

What’s happened?

In case you didn’t know Dubai World is the company that became notorious
worldwide for an eccentric attempt to recreate a map of the world with hundreds
of islands off the coat of Dubai. It also happens to oversee P&O Ferries and
Nakheel, the developer of the equally eccentric palm islands.

But On Wednesday last week Dubai shocked the world when it approached lenders
to plead for a debt standstill for the holding company. Suddenly it became clear
the Gulf’s boom town had been brought pretty close to its knees by the global
recession and a collapse in the emirate’s property market.

Credit agencies adjusted their ratings, Persian Gulf bond prices tumbled and
markets reacted. Regulators even started asking UK banks what their exposure
was. The story, along with Dubai’s prime minister Sheikh Rashid Al Maktoum, said
to be the most influential man in British horse racing, made front pages
everywhere. And yet Dubai World was looking for a fresh start. The government
immediately launched a restructure of Dubai World with Aidan Birkett at the

What happens next?

Dubai World and the restructuring should provide Deloitte and Birkett with
the kind of boost that Lehmans has given PwC – the latest count shows the
administration has wracked up £150m in fees. Dubai World might not provide quite
such a large income for Deloitte but it should be hefty given the size and
complexity of the debt involved.

Birkett is no stranger to large restructurings, though it’s difficult to
imagine anything as large as Dubai. His CV includes work on Cable and Wireless,
MyTravel, Gate Gourmet and the Spanish Real Estate Group. The firm says that in
total Birkett has personally restructured more than $100bn in debt.

He left PwC to head up corporate finance at Deloitte and now has a team of
1,200. A significant portion of that manpower will be needed on Dubai World, but
its size means there’s every chance that other parts of the firm will end up
involved too. He’ll need help. He will also need to bring all his experience and
skills to bear. He’ll have to tread the shifting sands of Royal reputations,
alongside creditors who will want to know their loans are safe.

Birkett is regarded as sharp but tough, but he’ll need to be very tough if he
is to work out better terms on all of Dubai World’s debt. There are creditors
out there with large sums at stake. It has been speculated that “standstill”
agreements and some refinancing might do it. Given the scale of the problem,
it’s a fair bet the job will need some creative answers too. And a great deal of

Deloitte reports that Birkett has been in Dubai since his appointment. Let’s
hope he makes it home for Christmas.

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