Dubai World, the state-owned investment vehicle, says it has reached an agreement “in principle” with most of its bank lenders to restructure debt worth $23.5bn (£16.4bn).

It added it would be left with debts of $14.4bn after the restructuring.

But the deal must still be approved by other banks that were not involved in the negotiations. Dubai World stunned global markets in November last year when it asked for a six-month delay on debt repayments.

The terms of the restructuring include converting $8.9bn of government debt into equity.
The government of Dubai and Dubai World had tabled this offer to a committee representing its bank lenders in March after three months of negotiations.

“We are pleased that we have received unanimous support in principle… on the headline economic terms to our restructuring proposal,” said Aidan Birkett, chief restructuring officer of Dubai World.