Dubai’s Nakheel pays $1.25bn to trade creditors

Developer behind Palm Jumeirah aims to finalise its debt restructuring by the end first half
Dubai’s Nakheel pays $1.25bn to trade creditors
Nakheel, the real estate arm of debt-laden conglomerate Dubai World has paid $1.25bn in overdue payments to its trade creditors
By Shane McGinley
Tue 29 Mar 2011 04:19 PM

Nakheel,
the real estate arm of debt-laden conglomerate Dubai World has paid AED4.6bn
($1.25bn) in overdue payments to its trade creditors, the company said Tuesday.

The
developer, which is seeking to delay some $10.5bn of debt, expects to secure
the agreement of trade creditors representing 95 percent of the debt by the end
of the first half.

 “Nakheel has to date made payments of AED4.6bn
($1.25bn) to its trade creditors. Today’s announcement marks significant
progress in our recapitalisation plan, following on from the initial payments
to trade creditors of AED500,000 or less, which commenced in March 2010,” the
company said in an emailed statement.

“As
advised last week, Nakheel is expecting to finalise its restructuring before
the end of first half of 2011," it added.

Nakheel,
which has been in negotiations with both trade creditors and banks to repay its
debt obligations, said it will soon issue restructuring agreements, including a
term sheet for an Islamic bond offering, to trade creditors that have signed on
to its restructuring plan.

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.

It
has said that 91 percent of its trade creditors have given the deal a stamp of
approval.

"This
is a critical milestone for the Nakheel restructuring process, upon completion
of which the sukuk will be issued," Nakheel said in a statement last week.

Nakheel's
statement follows an announcement from parent Dubai World that it has signed a
final agreement with its 80 creditors to restructure $24.9bn in debt.

Nakheel
was at the centre of Dubai's real estate boom with projects such as islands in
the shape of palms and a map of the world.

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.

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