Nakheel sukuk issue on August 25

Dubai-based Nakheel properties has set August 25 as a final date to issue the much-awaited Dh4.8-billion sukuk (Islamic bonds) to creditors after a two-month delay attributed by the company to administrative reasons.

“We have set August 25 as a final date for issuing the Dh4.8 billion sukuk as part of our $13-billion debt restructuring plan,” Nakheel’s chairman Ali Rashid Lootah told the Sharjah-based  Arabic language daily Al-Khaleej.

“The company has completed all administrative and auditing procedures need to start issuing sukuk…..the delay has been due to administrative reasons.”

Lootah said the sukuk would not be listed at any party at the beginning to “ensure all options for creditors to benefit from these sukuk.”

“They can sell or mortgage their sukuk in exchange for credit facilities…listing could be set later,” he said, adding that the German Deutsche Bank would manage the sukuk process that could last between two and three months.

Nakheel had said it would issue sukuk to its commercial lenders in June before it delayed the plan to July. Lootah said last week the delay was because of technical and administrative reasons.

In comments last week, Lootah said Nakheel does not object to plans by any bank to buy debt by its creditors. He was reacting to reports that a Hong Kong-based distressed debt firm, founded by ex-Deutsche Bank veterans, has approached trade creditors of Nakheel for that purpose.

The move by SC Lowy Financial is the first clear sign that distressed players are circling Nakheel's $10.9 billion debt restructuring.

“Trade and financial creditors of Nakheel are free to deal with their dues the way they want whether by transferring or selling them to others…Nakheel does not interfere in such negotiations because it is a matter between the creditors and investment banks which seek to buy debt,” Lootah told Alittihad daily.

“The reports that banks are now negotiating with Nakheel’s creditors in this respect illustrates the absolute confidence of these banks in Nakheel’s ability to pay back debt and issue sukuk as part of a settlement.”

The developer, which ran a parallel restructuring process to parent firm Dubai World , has offered trade creditors repayment of 40 percent cash and the remaining 60 percent in the form of an Islamic bond, or sukuk. Once its restructuring is complete, Nakheel will be owned by the Dubai government.

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