Limitless delays debt repayment by 90 days

The Dubai World subsidiary had a $1.2bn Islamic loan due yesterday.

Limitless, a developer owned by Dubai World, has been granted a 90-day delay to repay its US$1.2 billion (Dh4.4bn) Islamic loan that was due yesterday. It comes a week after its parent company said Limitless, best known for its shelved $11bn Arabian Canal project, would not be part of Dubai World's $24.8bn restructuring. At the time the Dubai Government said Limitless "did not require government support".

"The delay is consistent with the [Dubai World] announcement. The people writing up the proposal were well aware of the discussions between Limitless and its bankers," said a banker who wished not to be named. "That gave them sufficient comfort to take Limitless out of the restructuring process." Bankers are now negotiating rolling over the Limitless loan, which does not have an option to be extended, into a new facility.

"The deal is done," another banker familiar with the matter told Dow Jones. "Limitless is expected to request payment of the loan over five years," the banker said, Over the past year, it has become common practice for international and local banks to roll over loans to commercial customers, including government-related entities, as companies have been hard hit by the economic downturn and the sharp falls in property prices.

"If there is that necessity to lengthen out maturities we will support our clients. When clients approach us, we will do it," said Simon Cooper, the chief executive of HSBC Bank Middle East. Dubai World tabled its restructuring offer to creditors a week ago. It entails repaying its lenders in five to eight years, returning some cash to trade creditors now and fully repaying the bondholders of Nakheel, its developer, as the bonds fall due.

The two-year Limitless loan was led by Emirates Bank, which has since merged to become Emirates NBD, plus Emirates Islamic Bank, Arab National Bank and National Bank of Abu Dhabi. It was underwritten by 18 banks including Asian, European and regional lenders. The discussions between Limitless and its bankers have been drawn out. Until a few weeks ago, bankers on the seven-member co-ordinating committee that represents the 97 creditor banks in their discussions with Dubai World, were still unsure whether Limitless would be part of the restructuring process.

Limitless, which owns substantial amounts of land in Dubai, recently finished building a complex of office buildings called the Galleries in Downtown Jebel Ali. Limitless declined to comment. [e-mail]