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Nakheel hopes to reach pact with trade creditors soon

DUBAI — Nakheel, property unit of Dubai World, said on Tuesday that it was pressing ahead with its restructuring plan by holding talks with contractors and was hopeful of reaching a final settlement with all creditors.

The developer, which is seeking to restructure $10.5 billion of debt, on Tuesday met with senior members from UAE-based Contactors’ Association, including company Chairman, Dr Ahmed Saif Belhasa, as part of its efforts to ensure settlement of claims to its trade creditors as part of its recapitalisation plan, the company said in a statement.

Delegates from the Contractors’ Association were briefed on Nakheel’s progress to date to settle agreed claims to its trade creditors, which now represents more than 50 per cent of total agreed claims, the developer said. During the talks Nakheel assured the Contactors’ Association of the significant progress made, and clarified the need for continued co-operation from its trade creditors. On Thursday, the company, the property arm of Dubai World, said it had secured an agreement with trade creditors for more than 50 per cent of the claims valued at Dh6 billion.

The latest headway made by the property arm of Dubai World in debt settlement brings it closer to settling all claims agreed with its trade creditors as part of its 
recapitalisation plant

The company claimed that the meeting on Tuesday enabled both parties to openly discuss matters and clarify issues relating to trade creditor settlement. “Nakheel remains optimistic of reaching a final settlement, as a precursor to making a 40 per cent cash payment to its trade creditors,” the statement said.

Under the recapitalisation plan announced by Nakheel last month, trade creditors are offered 100 per cent recovery of their agreed claims through a 40 per cent cash payment and 60 per cent in the form of a publicly tradable security, carrying a 10 per cent annual return.

The 40 per cent cash payment will be paid to trade creditors as soon as an agreement of 65 per cent of the total agreed claims by trade creditors is reached.

Nakheel and Dubai World are renegotiating terms on a combined $24.8 billion of liabilities after the global credit crisis led to a 50 per cent slump in property prices in Dubai and a seizure of global credit markets hampered Dubai-based companies’ ability to borrow. Dubai’s government in March pledged $8 billion to Nakheel to help it pay contractors and suppliers, and complete projects as part of the restructuring.

issacjohn@khaleejtimes.com