Dubai World Tuesday said it is in talks with bankers aimed at accelerating its restructuring process announced last week by "considering alternatives in respect of debt obligations of certain entities within the group," state-run newspaper The National reported.

The move suggests Dubai World, one of Dubai's largest and most important conglomerates, is unlikely to meet its obligation to bondholders of the US$4 billion sukuk, or Islamic bond, from its subsidiary Nakheel payable on December 14, and that asset disposals are likely from the two property businesses involved, Nakheel and Limitless, the report said.

The proposed restructuring process would relate only to Dubai World and certain of its subsidiaries, including Nakheel World and Limitless World, the group said in a statement.

"The process will not include Infinity World, Istithmar World, and Ports and Free Zones World (which includes DP World, Economic Zones World, P&0 Ferries and Jebel Ali Free Zone)," the statement said.

It confirmed that Dubai World's debt restructuring process related to a total debt of US$26 billion.

"The total value of debt carried by the companies subject to the restructuring process amounts to approximately US$26 billion, of which approximately US$6 billion relates to the Nakheel sukuk," the statement said. Another 2 billion of the Nakheel sukuk falls due early next year.

The decision had been taken "following a detailed review of the group's liquidity and capital structure," the statement said.

"It is envisaged the restructuring process will be carried out in an equitable way for the overall benefit of all stakeholders and will comprise several phases including: long term plans and commitment of stakeholders, determination of maintainable profit and cash generation, assessment of deleveraging options, including asset sales, assessment of funding requirements and the formulation of restructuring proposals to financial creditors and their implementation," the statement added.

It said initial discussions have started with the banks of Dubai World and "are proceeding on a constructive basis."

"In light of the current operational challenges and the future obligations of the Group, it is anticipated that the process and any related actions to address strategic alternatives will be conducted on an expedited basis," the statement said.

As part of this overall process, Nakheel requests its sukuk holders to appoint an authorized representative with whom discussions can commence, it added.

The government of Dubai, a member of the oil-rich federation United Arab Emirates, announced last Wednesday that it would ask creditors of state-owned Dubai World to agree to a debt moratorium of at least six months as a first step towards restructuring.

The announcement, described by ratings agency Standard and Poor's as a default, provided the focus for world financial markets and media since last Thursday, hitting bank stocks worldwide.

(Xinhua News Agency December 1, 2009)