Nakheel, the real estate arm of debt-laden conglomerate Dubai World has paid AED5bn ($1.36bn) in overdue payments to its trade creditors, the company said Sunday.
The developer, which is seeking to delay some $10.5bn of debt, said last week it had won near-unanimous approval from trade creditors representing 95 percent of the debt.
“[The payment] marks significant progress in our recapitalization plan, following on from the initial payments to trade creditors of AED 500,000 or less, which commenced in March 2010,” the company said in an emailed statement.
Under Nakheel's restructuring proposal, trade creditors will receive repayment through 40 percent cash and 60 percent in the form of an Islamic bond, or sukuk.
Nakheel was one of the biggest casualties of Dubai’s real estate downturn, which saw prices halve from their 2008-peak and almost half of developments in the emirate cancelled.
The developer's inability to meet its debt obligations in the wake of a property collapse and the global credit crunch, helped trigger Dubai's debt crisis in 2009.
The company said in May it expected to conclude its debt restructuring by the end of the first half, and would be carved out of parent company Dubai World to become a state-owned entity.
Company CEO Chris O'Donnell left Nakheel earlier this month after five years at the helm.
Nakheel’s troubled offshore development The World is set to see its first island open to the public this year with the launch of The World Island Beach Club, Arabian Business reported last week.