By Staff writer
Developer's chairman confirms it has approached creditors to delay first installment on its $1.2bn restructured debt
Dubai government-owned property firm Limitless is asking creditors for more time to repay a $1.2 billion debt facility, its chairman said on Tuesday.
"We are revising our business plan. We need some more time. We are in discussion with banks and they are very cooperative," Ali Rashid Lootah told Reuters.
"We have been talking to the banks for a while now and they know the situation. There will be delays. We have a payment plan but this may just be shifted slightly from the earlier schedule."
While Lootah wouldn't elaborate on why the company was seeking a new repayment timetable, he said it was "still healthy and still in good shape".
The news suggests that while Dubai is recovering strongly from its 2009 debt crisis and property market crash, with most companies that have restructured loans succeeding in working through their obligations, the process is not uniform and significant obstacles remain.
Limitless, a former property arm of Dubai World, restructured the Islamic debt facility in October 2012 after several maturity extensions by a syndicate of lenders including Royal Bank of Scotland and Emirates NBD.
Under the deal, the company was given an initial grace period before scheduled repayments between 2014 and 2016. The revised loan carries an interest rate of 175 basis points over the London interbank offered rate, according to Reuters data.
The International Monetary Fund estimates the Dubai government and state-linked entities will face $78 billion worth of debt maturing between 2014 and 2017, an amount which it has described as "challenging".
However, the Dubai property market is rebounding rapidly from its crash - prices are up 33 percent year-on-year according to consultancy JLL - and this is helping many companies.
Debt repayments by Dubai World, which restructured $25 billion of obligations, are much larger and more important than the Limitless facility.
Mohammed al-Shaibani, chief executive of sovereign wealth fund Investment Corp of Dubai, told Reuters last month that Dubai World had the means to repay a $4.4 billion obligation in May 2015 and expected to make some future repayments early.
The first of many to come I fear! Let the bubble burst again?
this does not sound good at all.
i fear many more announcements like this will appear now.
at least they haven't issued chqs.
Can't be good for business confidence, if a real estate firm is asking to restructure a restructure before it has even made the first repayment. It gives the impression, albeit perhaps unjustifiably so, that the property market is on the slide once more. As my old boss would have put it, "on the crest of a slump".