By Andy Sambidge
Developer adds that it expects to win endorsement from remaining banks 'in coming days'
Dubai developer Nakheel says it has won almost unanimous approval from its financing banks for its restructuring plan.
The indebted company said in a statement that it expects to win the endorsement of the remaining banks during the coming days.
"The company expects to secure confirmation from the remaining banks over the next few days, following which Nakheel will proceed to the completion phase of the restructuring, which will include a subsequent issuance of a sukuk to the company's trade creditors," said a company spokesperson.
Nakheel, which is restructuring $10.9bn in debt, plans to repay 60 percent of its outstanding debt to trade creditors through the sale of a AED6bn ($1.63bn) Islamic bond, expected by the end of June.
On Wednesday, Nakheel said that its CEO Chris O'Donnell had left the company "after completing his contract terms".
Chief finance officer Sanjay Manchanda will replace O'Donnell as an acting CEO until further notice.
Nakheel confirmed in April it had stopped selling real estate units in Dubai.
The state-backed company, which overstretched itself building islands in the shape of palms and other ambitious projects, said its focus is instead on offering swap options to existing investors.
The company 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.
While the phraseology is different, agreement to the debt restructure plan has been in one set of words or another "near unanimous" for many months now.
The world financial community is watching what happens next with interest! There's much talk about the trade creditors' residual 60% payment sukuk being devalued from a cash-in perspective by 20% before it's even issued, but doesn't a 95% sign up to the plan also trigger a $7 to 8 billion Nakheel cash injection by the Dubai government i.e. once the deal with creditors is truly done.
There has been no mention of that facet of late and wasn't that money originally allocated to enable Nakheel to carry on with suspended projects. Odd that they should "stop selling properties" in the past few weeks.
Hopefully when those government funds hit the company bank account they will be able to deliver the infrastructure at Jumeirah Golf Estates along with the certificates which allow owners to move into villas now standing empty for 18 months.