Dubai World's trouble paying its debt obligations may not be too surprising when you consider some of the dubious investments it has entered into over the past few years. A case point is Dubai World's ill-fated voyage into the business of building and selling submarines for recreational use.

In September, Dubai World filed a lawsuit in federal court in Florida against one of its former executives, claiming Herve Jaubert caused more than $30 million in losses for the Middle Eastern-based company. Dubai World claims Jaubert used a Florida-based company he controls to "overcharge'' Dubai World for submarines Jaubert either couldn't manufacture or didn't work.

Dubai World says it entered into a deal with Jaubert on the basis of his claims that "he had designed submarines that were ready for production'' and he was a "naval engineer who was an expert in submarine design.'' On the basis of those claims, Dubai World formed a company called Exomos in 2003 to oversee the manufacture and sale of "luxury recreational submarines'' and tapped Jaubert as the CEO of the new business.

But Dubai World, in court papers, says it subsequently learned that Jaubert did not have the expertise he claimed. The complaint alleges that a number of the submarines and submarine parts Exomos purchased from a company allegedly controlled by Jaubert either didn't work, or were sold at inflated prices.

One submarine, for instance, "caught on fire and was damaged.''

The Dubai World lawsuit is just the latest twist in an unusual story involving claims of fraud and false imprisonment. Jaubert, who now resides in Florida, has charged he was forced to flee from Dubai in 2007 over the matter and that Dubai World has maligned his character.

It will be up for the courts to sort this all out. But none of this speaks well of Dubai World's due diligence before going into a speculative ventures.

Highlights from this week’s Thomson Reuters Investment Banking Scorecard:

6TH LARGEST IPO OF THE YEAR
In this week’s second largest ECM transaction Sands China, the Macau operations of US based Las Vegas Sands raised $2.5 billion on the Hong Kong stock exchange. It is the 6th largest IPO of the year and the second of its kind in a couple of months after Wynn Macau, a subsidiary of US based Wynn Resorts raised $1.9 billion in September.
Follow On activity is up 35% when compared to the same period last year with $528 billion and it also accounts for 75% of total ECM activity so far this year.

GLOBAL CORPORATE BOND ISSUANCE UP
The top two bonds issued this week are both investment grade corporate debt issues which are both above the $1 billion mark. UNEDIC and CDP Financials with $5.9 billion and $4.9 billion.
Global corporate bonds reached $2.4 trillion so far this year up 11% when compared to the same period last year. Corporate bond issuance also makes up 46% of total bond activity this year.

M&A HITS 5 MONTH-HIGH
Global announced M&A in November totaled $234 billion and marks the second busiest monthly level of activity of the last twelve months after June 2009 ($275 billion).
There were ten transactions in excess of $1 billion announced this week, including the $1.7 billion takeover of UK based JPMorgan Cazenove by JPMorgan Chase & Co.

Auto maker General Motors is grappling with the future of its European units Saab and Opel after one sale collapsed and the other was pulled, targeting the bulk of its 9,000 job cuts at Opel’s German factories.

Bookseller Borders UK called in the administrators yesterday, adding its name to a growing list of failed British high street retailers. Administrator MCR is hoping to sell the business, bought by Valco (the private equity arm of turnaround specialist Hilco) in July this year, as a going concern.

Lachlan Murdoch, son of News Corp chief executive Rupert Murdoch, sold some $27.6 million of his shares in his father’s company as he bought 50 percent of Daily Mail & General Trust’s radio operations in Australia.

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Concerns over Dubai World’s debt dominated the news as stocks around the world tumbled and markets struggled to get to grips with the extent of the problem in the absence of solid information, says the Financial Times.

Siemens AG’s hearing aids business, valued at up to 3 billion euros, is drawing interest from private equity firms including KKR and BC Partners, Bloomberg writes.

Shares in banks, builders and companies part-owned in the Middle East fall around the world, and investors seek safety in government bonds on worries about Dubai’s ability to pay its debts.

Meanwhile, global miner BHP Billiton (BHP.AX) dismisses talk that rival Rio Tinto (RIO.AX) is baulking at a proposed $116 billion joint venture in iron ore, insisting the two are close to a binding agreement.

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The charitable trust that’s the major shareholder in Hershey has sought the approval of the Pennsylvania attorney general for a possible $17 billion bid for Cadbury, the British confectioner being beseiged by US foods group Kraft, the WSJ writes. Hershey, which is weighing a solo $17 billion bid, as well as a possible joint bid with Italy’s Ferrero, needs the blessing of attorney general Tom Corbett before it can push ahead with plans to consummate a deal.

United Utilities has put its last non-core businesses on the block, the Times says. The sale of its last remaining non-regulated businesses in the UK, Australia and the Middles East, including outsourcing contracts with Welsh Water and British Gas Trading, could raise some 270 million pounds.

MGM has sent out confidentiality agreements to 20 parties, as the venerable Hollywood studio test the market for a possible sale. But bankers don’t think there will be more than a handful of interested parties who actually put in bids. The most serious bidders for the studio — which dates back to the 1920’s and owns the James Bond franchise — would likely be media companies that already operate studios and want to acquire MGM’s rich content library, like Time Warner, which owns the Warner Bros studio, Lions Gate or News Corp, which owns the 20th Century Fox studio.

People have been expecting greater consolidation among studios for some time now, as movie studios struggle to combat falling DVD sales and figure how how to make money off consumers watching their entertainment online or on mobile devices.

Apart from cutting costs on film production and financing, studios could potentially get greater pricing control over their content if they team up, goes the thinking. And it’s not just studios that want to own content. U.S. cable operator Comcast is hoping to get access to cable programming and a movie library through its proposed acquisition of NBC Universal.

Still, the value of the company’s movie library — thought by many to be its crown jewel — is up in the air. With movies on demand and digital downloading taking a bite out of DVD sales, it will be interesting to see how much MGM can pull in for that asset.

(Reporting by Anupreeta Das and Michael Erman)

Bookseller Borders UK has stopped taking online orders and is on the brink of falling into administration if a buyer for the business is not found, the FT reports.

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Private equity firm Endless and convenience store chain Costcutter have ruled themselves out of the race to acquire chunks of the Threshers off-licence empire, owned by First Quench Retailing, the Independent says, leaving rival retailers Bargain Booze, EFB Retail and Rhythm & Booze still in the chase.

There’s a big war brewing over single-serve coffee brand Diedrich Coffee Inc.   

Green Mountain Coffee Roasters Inc on Tuesday raised its bid for Diedrich to $265 million, or $32 a share in cash, to challenge a sweetened offer from Peet’s Coffee & Tea Inc on Monday. Peet’s cash-and-stock offer is valued at $30.41 per share.
    
Diedrich, which makes and sells K-Cup refills for Green Mountain Coffee’s single-cup Keurig brewer system, said its board is “continuing to analyze the two offers” to determine whether Green Mountain’s offer “continues to be a superior proposal.”
    
Peet’s, of course, said it thinks its cash-and-stock proposal is superior “given the greater certainty of an faster closing and the potential upside for Diedrich’s shareholders through the Peet’s stock component.” It has until Friday to make a revised offer.
 
Meanwhile, Green Mountain said its all-cash offer is better than Peet’s because Peet’s proposal is subject to market fluctuations in its stock price. 

Earlier this month, Peet’s had agreed to buy Diedrich for $26 per share, in a bid to cash in on Diedrich’s status as a licensee of Green Mountain’s fast-growing single-cup coffee brewing systems. Green Mountain emerged as an interloper with a competing offer.

“Peet’s does have a sense of urgency to enter the fast-growing single cup market, and Diedrich probably is its only reasonable opportunity,” Anton Brenner of Roth Capital Partners said.

British publisher Informa is in talks to buy its German rival Springer Science and Business Media from private equity firms Candover and Cinven, the FT says.

Informa initiated talks with Springer three weeks ago and is considering an all cash bid, according to its story, but private equity firms including Apax and EQT are still looking at the business.

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French fashion group PPR is planning to sell its retail businesses, including books and music chain FNAC and discount furniture business Conforama, as soon as it can, chief executive Francois-Henri Pinault told the WSJ.

Insurance broker Marsh & McLennan is closing in on a deal for HSBC Insurance Brokers, the UK’s ninth largest broker, valued at 150 to 200 million pounds, the Daily  Telegraph says.

Ranked by Forbes as India’s richest man with a net worth of $32 billion, Mukesh Ambani is no stranger to taking risks.

The move by conglomerate Reliance Industries, controlled by Ambani, to bid for bankrupt LyondellBasell is a calculated one. Markets seem to think this is a bargain and investors pushed up Reliance’s stock nearly 4 percent on Monday.

If the deal, which sources say may be worth $12 billion,  goes through, it would catapult Reliance into the ranks of top petrochemical makers such as Saudi Arabia’s SABIC, Germany’s BASF and Dow Chemical Co.

The bid comes at a time when asset prices have fallen globally in the wake of the economic crisis but there are still some lingering doubts over whether the worst is over for the global economy.

Reliance hasn’t shied away from making mega investments during downturns.

Last December, Reliance commissioned a 580,000 barrels per day refinery next to its existing 660,00 bpd plant  in the western Indian state of Gujarat, creating the world’s biggest oil refining complex just as global oil demand began to collapse.

Reliance has a cash pile of $4 billion and $8 billion in treasury stock that can be sold, so funding is unlikely to be an issue for the company, Macquarie said in a research note ahead of the bid. Bank of America Merrill Lynch is among the advisers for Reliance, sources said.

In its bid for Luxembourg-based LyondellBasell, which filed for bankruptcy protection in January, after being unable to make its debt obligations, Reliance, India’s largest listed firm, with a market value of about $75 billion, might be taking advantage of the lack of any competing bids.

LyondellBasell had sales of close to $51 billion in the 2008/09 financial year, while Reliance, which has interests in petrochemicals, refining, oil and gas exploration, and retail, logged revenue of about $32 billion.

Fertilizer maker Terra Industries rejected another bid from CF Industries Inc on Sunday. But tucked into that rejection was another piece of news that some might have missed — Terra has reappointed the three directors that shareholders voted down last week in favor of a slate of directors backed by CF. The Terra directors that lost out to the CF slate included Chairman Henry Slack.

“The board, by unanimous vote of the directors whose terms do not expire this year, has taken steps to expand to eleven members, to be effective at that time, so that Terra’s three highly-qualified and experienced independent directors, Martha O. Hesse, Dennis McGlone and Henry R. Slack, will continue to serve on the board,” Terra wrote near the bottom of its Sunday night statement. “The board believes that Terra’s shareholders will benefit the most by combining this experience with the new perspective of the three additions to the board.”

The move — although possibly dilutive to shareholder democracy – was not necessarily unexpected.

CF Industries CEO Steve WIlson sent a letter to Terra shareholders earlier this month saying that Terra, a Maryland company, could reappoint the directors under the state’s laws.

“If the Terra board decided to take such action in the exercise of its fiduciary duties (without disenfranchising stockholders through increasing the size of the board beyond what would result from reappointing those directors), we would not be in a position to object,” Wilson wrote in the letter.