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29 March 2024

Banks can buy Nakheel debt

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By Staff

Dubai-based Nakheel Properties does not object to plans by any bank to buy debt by its creditors who wait for the company to issue Dh4.8 billion sukuk within restructuring plans, its chairman was quoted on Tuesday as saying.

Ali Rashid Lootah was reacting to reports that a Hong Kong-based distressed debt firm, founded by ex-Deutsche Bank veterans, has approached trade creditors of Nakheel with an aim to taking the claims off their hands.

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.”

According to Alittihad, banks have asked Nakheel’s trade creditors to submit their proof of claims so that it can be reviewed for details.

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.

Lootah said last month he expected the sukuk to be issued at the end of July or early August at a profit rate of 10 per cent.