Nakheel will be carved out of parent company Dubai World and
become a government-owned entity by June, when its efforts to restructure $10.8bn
in debt will be complete.
"Nakheel separation has not occurred as yet, but will
happen once the restructuring is finalised which is due to be completed by
June," a company spokesperson told Emirates
The indebted developer was at the heart of the debt problems
suffered by its parent company Dubai World, which roiled global markets in
November 2009 when it asked for a standstill on around $25bn in loans.
Nakheel’s inability to meet its obligations, in the wake of
a property collapse and the global credit crunch, left it with billions of
dirhams in unpaid bills to contractors and suppliers.
In March, Nakheel said it had paid AED4.6bn ($1.25bn) in
overdue payments to trade creditors.
The developer plans to issue around AED5bn in Islamic bonds
by the end of the second quarter to contractors and trade creditors.
“The sukuk will be concluded by the end of
the second quarter of 2011,” a spokesperson said.
More than 90 percent of trade creditors have agreed to a
plan that would see Nakheel pay off its bills through a 40 percent cash payoff
with the remaining 60 percent issued in the form of sukuk shares with an annual
return of eight percent.
Lawyers in Dubai warned in March that investors and trade
creditors may find themselves unable to pursue disputes against Nakheel in the
Dubai World tribunal after the split from Dubai World.
Those with outstanding disputes may find themselves in legal
limbo if the tribunal – which was set up to hear disputes linked to Dubai World
– can no longer rule on cases related to Nakheel.
The developer behind Dubai’s iconic palm-shaped island said
in April it had stopped selling real estate units in Dubai in order to focus on
offering credit swap options to existing investors.
Nakheel offered credit swaps in the wake of Dubai’s real
estate crash, to enable buyers to transfer cash from unfinished or halted
developments to completed real estate.
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