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Nakheel may sell shares before sukuk matures

Nakheel's three-year 'Ijara sukuk,' sold in November 2006, is the world's biggest Islamic bond and gives holders the right to buy shares in any of the Nakheel group of companies should there be an initial public offering before the securities mature. If there are no share sales, additional payments will be made on redemption.

"It's still an option for us as under the sukuk we've an exit arrangement that allows us to IPO where the sukuk-holders get a preferential position,'' Nakheel's Chris O'Donnell said in an interview in Dubai yesterday. "There are benefits and burdens with being listed,'' he said.

Nakheel, a unit of Dubai World, is building three of the world's largest man-made islands as it seeks to add 500 kilometres of new coastline to the region. The world's third-largest port operator DP World, also a unit of Dubai World, is planning a $3.5 billion IPO next month, two people with knowledge of the proposal said Oct. 4.

The Dubai developer may borrow as much as $3 billion over the next 12 months to fund more projects including a skyscraper, which may rival the Burj Dubai, the world's tallest tower, O'Donnell said.

With the sukuk and ijara we have already done debt is probably sitting at 12 or 13 or 14 per cent to equity, so we have more room to move there,'' he said.