Nakheel, the developer of the Palm and World projects in Dubai, has presented to its financial creditors its proposals to deal with billions of dollars of debt. The plans were given a cautious but positive reception by bankers. The proposals were presented at a meeting between the company and more than 20 banks yesterday at the Atlantis, The Palm on Palm Jumeirah.
One banker said: "There was nothing especially new in their proposals. We have seen them before. But we are able to consider them now as formal propositions." Nakheel owes about US$10.5 billion (Dh55.09bn) to banks, contractors and customers, with financial creditors thought to account for about $4bn of that total. The debts are being rescheduled as part of the general restructuring of the debts of Dubai World, Nakheel's parent, which run to $23.5bn.
Creditors are being asked to change the terms of their existing loans to Nakheel to a new repayment plan of between five and eight years. Most of the new debt will carry an interest rate of 1 or 2 per cent a year. The company would not confirm reports that one tranche of debt would pay as much as 4 per cent a year. A statement said: "The company has negotiated the terms of the restructuring with the co-ordinating committee [CoCom] of its creditor banks, with the support of Dubai World and the Government of Dubai.
"The terms of the restructuring are unanimously supported in principle by the CoCom, subject to further internal approvals. "As is customary at this stage of the process, no resolution was sought in the meeting. Creditor banks will have the opportunity to review the information provided before responding to the proposal. The company expects to complete the restructuring over the coming months." A meeting of financial creditors to the parent Dubai World is due to be held next week.
Nakheel has started to pay its trade creditors as part of an offer made in March, when the Dubai Government said it would inject $8bn into the property developer. Under the deal, contractors were offered 40 per cent in cash and 60 per cent in the form of tradable securities with a 10 per cent yearly return. Riad Kamal, the chief executive of Arabtec Construction, said last week the company had received 40 per cent of what it was owed.
Nakheel said this month it had reached an agreement with 75 per cent of its trade creditors and would settle Dh4bn of claims within two weeks. The developer also needs to have 95 per cent of all its trade creditors on board before it can start the second phase of payments in the form of tradable securities. @Email:fkane@thenational.ae @Email:agiuffrida@thenational.ae
