By Staff writer
Ali Rashid Lootah says he expects creditors to accept up to 80 percent less than what they are owed
Nakheel chairman Ali Rashid Lootah said the indebted Dubai developer is "not in a hurry" to pay AED5bn (US$1.36bn) due in creditor claims, and expects contractors to accept up to 80 percent less than what they are owed.
Speaking to Gulf Business magazine, Lootah said the firm behind the Palm Jumeirah and the stalled The World projects had settled AED3bn out of a total claim of AED8bn from creditors. He added that he expects to lower the value of the remaining invoices to approximately AED1bn.
"The remaining big boys, they put the big figures, but we're confident it will be about the same [reduction]," Lootah said. "We expect to bring it down to not exceeding AED1bn total. We're patient. I'm not in a hurry to pay - if they want to settle, they have to be reasonable."
Nakheel was heavily involved in Dubai's 2008-2009 property crash that saw prices in the emirate plunge by up to 60 percent. In August 2011 the developer completed around US$16bn in debt restructuring.
Earlier this week, the state-owned developer said its first-half profits jumped 36 percent, buoyed by property handovers on several projects.
Nakheel, whose extravagant developments at the height of Dubai's property boom contributed to the emirate's debt woes, has been slowly recovering from the crippling real estate collapse.
The developer said net profit was AED767m (US$208.82m) in the first six months of the year, up from AED562m in the year-ago period.
Revenues rose to AED3.1bn in the first half, up 112 percent from the corresponding period a year ago, it said in a statement.
Not a great way of doing business is it? Embarrassing.
In other words, we wil not pay...do what you can!
This is taking comical proportions. Flat broke home owners defaulting on their mortgage must pay or face jail. Nakheel on the other hand are boasting their inability to pay and their ability to give creditors (big and small) a serious haircut. What a wonderful world.
This from the company which is banning owners from facilities if they are not up to date on payments, you really could not make this up.
Its a disgrace to Dubai and all honourable Emirati's that I knew when I lived in UAE
How funny... i wouldn't see that coming out of you if it was the opposite way around.
Reasonable??? is trying to lower the debts from 5bn to 1 bn reasonable? Big Boys?
Great doing business with you Nakheel.
and yet they expect their debtors to pay immediately, even if completion dates are delayed... hypocrisy?
The transperency message from Dubai developers since the begining is now clear: Overcharge, underdeliver, put people in jail and not pay its debts. This is a nice business model. The only thing is that in my country, they call this a scam and who ever is behind is taken to jail but after a fair trial. This is said in the month of Ramadan. Great ethics.
They're expected contractors to take just 20% of what they are owed?
What about the property owners, can they just pay Nakheel 20% of the final fee of the property then? Nakheel has sold its properties at full price but expects to only pay 20% of the actual cost of delivery.
This is precisely how companies go out of business. If you pay contractors just 20% of what they are owed, they then do the work at a cost to themselves. Many companies simply cannot afford to do this and will go bust, costing thousands of jobs. Such a move would effectively kill the construction industry in Dubai stone dead. If contractors believe they will never get paid properly for state developers, they will never work in this country again and you can kiss goodbye all these grand plans of hosting the World Cup and the Olympics. Nakheel says people have to be reasonable - this is NOT reasonable
And the Quran tells us that the munafiqun (the hypocrites) are the worst of people. Indeed so. Nakheel's shame knows no limit.