Middle East-based investment company Dubai World has been handed a US$9.5bn (£6.4bn, €7.1bn) bailout by Dubai's government.

The government funding package forms part of the state-owned conglomerate's restructuring plan worth US$23.5bn (£15.8bn, €17.6bn), which has been put to creditors. Dubai World - owner of Leisurecorp and Nakheel - caused panic on the global financial markets in November 2009 when it asked for a six-month standstill on debt repayments.

The Dubai Financial Support Fund (DFSF) will convert US$8.9bn (£6bn, €6.6bn) of debt - worth 38 per cent of Dubai World's standalone debt - into equity. A further US$1.5bn (£1bn, €1.1bn) will be committed by the DFSF to provide working capital and interest payments on new debt facilities as part of the proposals.

Dubai World chief restructuring officer Aidan Birkett said: "This proposal follows extensive discussions with our creditors, a thorough review of Dubai World's businesses and significant financial support from the government. "It offers the company a strong future and the opportunity to maximise the value of its assets over the medium to long term."