Nakheel sees trade creditor debt deal within weeks

Dubai World subsidiary will issue sukuk for $10.8bn debt restructuring plan by end of June
Nakheel sees trade creditor debt deal within weeks
Nakheel’s inability to meet its obligations left it with billions of dirhams in unpaid bills to contractors and suppliers
By Shane McGinley
Sun 22 May 2011 08:56 AM

Indebted state-backed developer Nakheel aims to achieve 95
percent agreement among its trade creditors and issue the Islamic bonds
required to finance its debt restructuring by the end of the second quarter.

More than 90
percent of trade creditors have agreed to a plan that would see Nakheel pay off
its bills through a 40 percent cash payoff with the remaining 60 percent issued
in the form of sukuk shares with an annual return of eight percent.

“For the agreement with creditors, we are looking to
finalize by end of second quarter of 2011,” a Nakheel spokesperson said in an
emailed statement. “The sukuk will be concluded by the end of the quarter.”

In March, the developer said it had made cash payments of
$1.25bn to its trade creditors under its plan to restructure $10.8bn in debt.
Nakheel confirmed in April it had stopped selling real estate units in Dubai.

The developer behind Dubai’s palm-shaped island was the
biggest casualty of the emirate’s real estate crash, halting work on a number
of offplan projects.

Nakheel’s
inability to meet its obligations left it with billions of dirhams in unpaid
bills to contractors and suppliers and helped trigger Dubai’s debt crisis in
2009.

Last week, a
company spokesperson said Nakheel would be carved out of parent company Dubai
World and become a government-owned entity by June.

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