By Staff writer
Developer reportedly asks creditors to defer the first installment on a $1.2 billion loan until the end of 2016
Dubai-based developer Limitless has reportedly asked creditors to defer the first installment on a $1.2bn loan until the end of 2016.
Bloomberg cited people familiar with the matter when reporting that the company has also requested that banks reduce the margin on the facility.
A Limitless spokeswoman told Bloomberg that the company’s private discussions with lenders are ongoing, declining to comment further.
It is understood that the first installment on the loan is due in December.
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.
In April, the chairman of the Dubai government-owned property firm confirmed it is asking creditors for more time to repay the debt facility.
"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.
Limitless is one of a number companies in Dubai that restructured debt after property prices slumped in 2009. Chairman Ali Rashed Lootah said in April the company is revising business plans and will approach lenders about the debt maturing in 2014.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
This is not the first 'entity' to seek a deferment, which when all told and done, is pre-emptive action prior to a 'default'. The fact that this is a default of the first repayment begs the question...where did all the money come from for the 'boom'.
As I said, this is not the first entity to run into this situation with its lenders...and will not be the last. But the question as to be asked...what money has been used to stoke this second Dubai property boom?
Many Developers, the big ones included, are starting new projects without finnishing their first...Palm Jebel Ali is left to 'decay' whilst Palm Dierra receives NEW investment.
When you peel back the layers...there are more questions than answers. The fairy tale story, "The Emporers Clothes", is becoming a very fitting analogy to this latest 'Boom'.