By Shane McGinley
Dubai World subsidiary will issue sukuk for $10.8bn debt restructuring plan by end of June
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.
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
Last week, a
company spokesperson said Nakheel would be carved out of parent company Dubai
World and become a government-owned entity by June.
Doesn't this timescale for a creditor conclusion also depend on the number of court cases Nakheel have outstanding at the Dubai Tribunal and the final financial implications of any negative ruling against them which must affect the value of the assets which I assume will underwrite this Islamic bond. $US 272 million alone at stake in the case between Souq Residences and Nakheel.
The timing of the separation from Dubai World to come under the Dubai Governments wing coinciding with the creditor settlement has probably spooked a number of parties into bringing Dubai World tribunal cases before the power of that jurisdiction is lost.
Also understood that this bond was to be tradable which I assume means from day one or a yield of 10 per cent per year for six years (guaranteed??) if you hang on to it?
The expression "in the next few weeks" has not been used before, a mix of quarter closes and halves as time has marched on, yes! Or is AB just translating the end of June? We shall see!
at varying times this has been 100%, now 95% and even 90% of creditors in agreement. I wonder if this will ever end?