Dubai selling off the Queen Elizabeth 2?
Dubai is reportedly preparing to sell a host of assets, including one of the world’s best known cruise ships, as the emirate’s investment arm looks to restructure a mountain of debt.
The Queen Elizabeth II, or QE2, is rumored to be one of the assets that Dubai’s state-run private equity firm, Istithmar World, is planning to sell. An Istithmar spokesman did not respond to requests for comment on Tuesday.
However, a company spokesman told Arabian Business that “there are a number of options being considered for QE2. IW is considering which option will best maximise value of the vessel.”
Istithmar bought the QE2, once the largest passenger ship in existence, in 2007 for an estimated $100 million. The firm had planned to turn the ship into a floating hotel attached to a man-made, palm-shaped island in the Persian Gulf.
Also in the firm’s portfolio is a 20% stake in Canadian circus group Cirque du Soleil. But a Cirque du Soleil spokeswoman said the group has had no indication from Istithmar that a sale is pending.
Any proceeds from the asset sales would probably be used to pay down the $22 billion in debts that Dubai World, the parent company of Istithmar, took on during a multiyear, global property binge.
Dubai was one of the first sovereign nations to run into serious debt problems as a result of the global economic downturn. The fallout has now spread to Europe, where Greece and other countries are struggling to slash budget deficits and repay mountains of debt.
Dubai World, the investment arm of Dubai, rattled financial markets late last year when it signaled that it couldn’t make payments on its debts. The company received a $10 billion bailout in November from fellow emirate Abu Dhabi and is working with creditors to restructure its debt load.
As a result, Istithmar has already been forced to sell some assets at a loss. In December, the firm sold the W Hotel in New York for only $2 million in a foreclosure auction. It reportedly paid more than $200 million for the boutique hotel in 2006.
Last week, Istithmar sold its stake in Indian budget airline SpiceJet for $37 million. It also recently announced plans to sell port and shipping agent Inchcape Shipping Services for $700 million.
Despite the recent asset sales, Istithmar still has a large portfolio of investments and properties, including a large stake in book publishing giants Houghton Mifflin and Harcourt Education. It also has interests in U.K.-based Pension Insurance Corporation Holdings and Perella Weinberg Partners, a New York-based investment firm.