John Fowler, Big4.com
13 October 2010
(blog) We have blogged earlier about how Aidan Birkett, who was a key managing director in Deloitte UK’s restructuring practice went first to help Dubai World when it surprised global markets on the eve of Thanksgiving 2009. The company, in a terse statement, shocked investors when it said it would be unable to fully meet its debt payment obligations.
He then took over as Chief Restructuring Officer for the troubled company. And now almost a year later, Mr. Birkett, according to the Financial Times of London, is off again. He is leaving his position on Thursday October 14, 2010 after “successfully completing” the troubled conglomerate’s $23.5 billion debt refinancing. His term was originally planned till December 2010, so this sudden departure calls into question, whether it was voluntary or forced. We have seen many versions on this departure, some saying “leaves”, and others saying “quits”, “steps down”, “heading out”. The official tone is stepping down, and that’s what we’ll use for the title.
The government of Dubai’s media office is announcing that a supreme committee which has assumed the executive powers of all Dubai World’s board was now setting up a permanent management structure.
An overwhelming majority of financial creditors to Dubai World agreed to a comprehensive restructuring plan laid out earlier this years, by which they will get their money back over a 5 to 8 year timeframe at sub-commercial interest rates.
Dubai World got a lifeline of $20 billion from its oil-rich neighbor Abu Dhabi, as the UAE government took swift action to prevent defaults. Now to further control the debt situation, Dubai World will have to sell off some of its prized assets and get further input from the government to survive.
Investors loved Dubai World’s return to capital markets in September 2010 by oversubscribing to a $1.25 billion sovereign bond and a convertible bond issue of up to $500m, launched by the state-backed Emaar Properties.
And now with the Dubai World’s debt restructuring nearly complete, the government believes it has left the worst of the crisis behind. The supreme committee overseeing Dubai World is chaired by Sheikh Ahmed bin Saeed Al Maktoum, chairman of Emirates Group, Ahmed al-Tayer, governor of the Dubai International Financial Centre, and Mohammed al-Shaibani, director general of the ruler’s court.
What’s not very clear is where Mr. Birkett is going. After a big job well done, will he return to Deloitte UK, or move on to other things? No news on the Deloitte UK website as yet.
Now, KPMG is on the other side of this transaction, and assisting the creditors’ committee, doesn’t think that the deal is done. Philip Davidson, global head of restructuring at KPMG, reportedly telling the Reuters Restructuring Summit that other situations had been on hold in the emirate until more clarity emerged on that restructuring. And it would take another full year for things to resolve. "That process has only been going on for four or five months," said Davidson, "As a simple matter of volume, it will take at least a year for all of these issues to wash through the system."
So, with or without Birkett, there’s still a long road ahead for this debt-ridden company. (blog)