Indebted Dubai developer says 91 percent of trade creditors have signed up to deal
Nakheel, the real estate arm of state-owned conglomerate Dubai World, expects its $10.9bn debt restructuring process to be completed by the first half of 2011, it said on Wednesday.
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 on Wednesday.
Nakheel needs to reach a 95 percent "restructuring threshold" to push the proposal through among trade creditors.
The developer said it will also issue a term sheet to its core creditor committee for final approval from lenders, adding that the restructuring process is nearing completion.
Nakheel's statement follows an announcement from parent Dubai World on Wednesday 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.
Gain time, gain time and again gain time. They are as credible as the Fukushima nuclear plant director.
Any of the banks presented Nakheel's security cheque? They'd have 'Mr. Ordinary' in the slammer in no time for the slightest attempt to 're-structure' a debt.