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Nakheel hopes to sign lenders deal next week

Abdul Basit / 6 July 2010

DUBAI - Property developer Nakheel is likely to reach an agreement with lenders next week, a top official of the company said.

The developer, a unit of Dubai World, will also complete a 40 per cent cash payment to its 1,000 biggest trade creditors before mid of July, Nakheel said on June 30.

The move followed initial payments made to trade creditors whom the company owed Dh500,000 or less. The payments began after the announcement of its restructuring plan in March this year.

“We are meeting with bankers on July 14 and hopefully they will sign the contract,” Nakheel Chairman Ali Rashid Lootah told Khaleej Times.

Lootah took charge of Nakheel board in March when Government of Dubai revamped the board of directors of the property giant. He replaced Sultan Ahmed bin Sulayem.

Last month Lootah said the agreement with lenders/banks was likely to be reached by mid-July. “Secured bank creditors, secured lenders under syndicated, club and bilateral facilities will receive 100 per cent of principal and accrued interest or profits through a rollover and maturity extension on existing facilities, based on EIBOR/LIBOR,” the company said in March.

Nakheel said unsecured bank creditors Holders under Nakheel’s unsecured Ijara Club facility will receive 100 per cent of principal and accrued interest or profits through a new debt facility with any existing third party credit support remaining in place.

In a recent move Nakheel has been the responsibilities of Dubai World’s Limitless with an aim to achieve the best results for both the developers.

“The Higher Committee to oversee Dubai World and its units decided to entrust the board of Nakheel with handling responsibilities of Limitless in a step aimed at setting united strategies and programmes to deal with the real estate sector,” the Dubai Media Office said in a statement on Saturday.

In March, Nakheel announced a comprehensive recapitalization plan of its debt and liabilities. As part of the recapitalisation plan, trade creditors were offered 100 per cent recovery of their agreed claims, with 40 per cent cash payment. The remaining balance of 60 per cent, in the form of a publicly tradable security with a 10 per cent annual return, is expected to be issued in the coming months, the company said.

Under the proposal, the Government of Dubai, through the Dubai Financial Support Fund, or DFSF, committed to providing approximately $8 billion of new money directly to Nakheel to fund operations and settle liabilities. In addition, the DFSF had proposed to convert its existing $1.2 billion debt claim in Nakheel into equity.

abdulbasit@khaleejtimes.com

 
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