Nakheel final debt deal soon

Dubai-based real estate major Nakheel has received the approval of almost 99 per cent of its lenders for a debt restructuring programme, the company has said in an emailed statement, adding that it expects to secure confirmation from the remaining banks within days.

“Nakheel is pleased to announce that it has secured near unanimous approval for the restructuring plan from its financing banks (98.63 per cent by value),” a Nakheel spokesperson said in the statement.

“The company excepts to secure confirmation from the remaining banks over the next few days, following which Nakheel will proceed to the completion phase of the restructuring, which will include a subsequent issuance of a sukuk to the company’s trade creditors,” the statement added.

Nakheel, along with Dubai World, has been a principal beneficiary of funding from the Dubai Financial Support Fund (DFSF), says a Government of Dubai prospectus dated June 10, 2011.

Apart from a repayment in 2009 of a $4.1b sukuk issued by Nakheel Development, the DFSF has also committed to provide $8b of additional funds to Nakheel to fund operations and settle outstanding liabilities, including payments to Nakheel’s contractors and suppliers.

Nakheel has been in discussion with its creditors and has announced comprehensive proposals for the restructuring of its outstanding debt obligations, which contemplate Nakheel being spun-off by Dubai World.

As part of the restructuring proposals, financial creditors have been asked to restructure their debts at commercial rates and trade creditors have been offered a combination of cash and a tradable security.

Nakheel has commenced making payments to its trade creditors and has stated that customers of Nakheel will either receive their completed property or, for those investing in longer-term projects, will be offered the option of receiving credit for the full amount of payments made by them against purchase of properties in projects nearer to completion. Those customers invested in longer-term projects who do not want to exchange their property for a property in a development nearing completion will be offered the option of a revised payment schedule or the option to hold the assignable credit for five years.

Customers will be able to swap the credit during this period for property or land, or for cash at the end of five years. Upon maturity, sukuk issued by Nakheel Development Limited, Nakheel Development 3 Limited and Nakheel Development 2 Limited, respectively, which matured in December 2009, May 2010 and January 2011, respectively, were redeemed at par using funds provided by the DFSF.

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