Nakheel deal in two weeks - contractors' association

Deal over developer's debt repayment offer should be completed soon.
Nakheel deal in two weeks - contractors' association
NAKHEEL DEAL: Nakheel repaid a $980 million Islamic bond on schedule last week.(Getty Images)
By Reuters
Fri 21 May 2010 01:11 PM

A final deal over Dubai developer Nakheel's debt repayment offer should be completed within two weeks, the head of the United Arab Emirates Contractors' Association said on Friday.

The developer of palm shaped, man-made islands has 50 percent approval for the deal, Ahmed Saif Balhasa said in the Emirati newspaper Al Bayan, leaving it 15 percent shy of the necessary 65 percent.

The last 15 percent should not be difficult to get he said, because of assurances given to creditors by Nakheel.

"We understood from Nakheel that it will give full repayments soon", Balhasa said, urging other contracting companies to sign the deal quickly.

On Wednesday, Arabtec, the United Arab Emirates largest builder by market value, signed on to Nakheel's debt repayment offer.

"We have concluded the deal and we encourage everyone to sign," Arabtec's Chief Executive Riad Kamal told Reuters. "Time is not on our side...This is a good agreement for everybody."

Trade creditors have been offered full repayment, with 40 percent in cash and the rest with an Islamic bond, or sukuk, which has a 10 percent annual return.

Nakheel repaid a $980 million Islamic bond on schedule last week.

On Thursday, Nakheel's parent company, the state-owned Dubai World reached a deal to restructure $23.5 billion in debt with its core lenders.

Dubai world will offer one percent cash interest and an extra 1.5 to 2.5 percent per annum rolled into a lump sum payment on maturity. Dubai will convert into equity the $8.9 billion it is owed by the group.

The disparity between the two offers has been a sticking point for some lenders, who feel Nakheel offered a far better deal on interest rates.

The Dubai World deal, which includes no new money from the government and is broadly in line with proposals made in March, must still be agreed by banks outside the core negotiating panel, which holds 60 percent of the exposure, Dubai World said on Thursday. (Reuters)

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