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Sun 6 Jun 2010 06:00 PM

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Nakheel starts paying contractors owed up to AED500k

Developer says in process of paying debts of creditors owed AED500,000 or less.

Nakheel starts paying contractors owed up to AED500k

Nakheel said on Sunday that it has started paying its contractors, which are owed AED500,000 ($136,240) or less.

"All trade creditors have been or are in the process of being paid AED500,000, which means that those owed AED500,000 or less are paid in full," a spokesperson for the company said in comments published by newswire Zawya Dow Jones.

The company told the newswire that that talks with Nakheel's partners were progressing, adding: "We are confident that an agreement will be reached shortly."

Last month, Nakheel said that that more than half of its claims with trade creditors have been approved.

Under a deal announced in April, Nakheel is offering trade creditors a 40 percent cash payment and 60 percent in the form of a publicly tradable security, with a 10 percent annual return.

Nakheel has to secure 65 percent approval in order to release the 40 percent cash payment to creditors, which include contractors and suppliers.

Earlier on Sunday, local Arabic daily Al Bayan reported that Nakheel would resume construction within a few weeks on all short-term projects that were delayed to restructure the company.

Nakheel, the real estate unit of Dubai World, is restructuring $14.2 billion of debt.

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Original Joe 10 years ago

Why is this news??? Creditors who are owed less than AED 500,000? I would like AB to investigate how many (or few) creditors this is? Nakheel is a big company with lots of projects, mostly dead projects. Such a small amount of money owed seems to me to be a very smalltime creditor. I would like to know how many Nakheel creditors are owed at least AED 5 million, at least AED 10 million, 15 million +. Once these creditors are paid this money should start flowing through the economy. I will consider payments by Nakheel "news" worthy once they start writing checks in the tens and hundreds of millions of Dirhams.

Chris 10 years ago

I feel deeply for the companies that had to fund themselves while Nakheel restructured (in some cases up to several years as payments have been delayed) then accept such a small sum initially with a longer term repayment as a publically tradeable security that will not sell at full price. They are again taking another discount for the work that they have done.