Nakheel starts cash payments to creditors
Dubai, June 30, 2010
Troubled Dubai developer Nakheel on Wednesday said it has started making cash payments to trade creditors, in the second phase of a repayment schedule, with the rest to come in the form of a bond in coming months.
Trade creditors owed more than 500,000 dirhams ($136,200) have been offered full repayment by the developer, owned by state conglomerate Dubai World, with 40 per cent in cash and 60 per cent via an Islamic bond which has a 10 per cent annual return.
The move follows initial payments to trade creditors owed 500,000 dirhams or less which began in March.
Nakheel, which has repaid two Islamic bonds since parent Dubai World said it would need to restructure its debts in November, is in parallel talks over about $10.5 billion in debt.
Dubai World has agreed with its core creditor banks on a proposal to restructure $23.5 billion in debt, including Nakheel's borrowings.
Arabtec, the United Arab Emirates' largest builder by market value, said on Monday it expects to receive the 40 per cent cash payment 'this week or next.'
Some analysts have put the figure Nakheel owes Arabtec at around Dh2 billion. In 2008 Nakheel, launched a kilometre-high tower, only for the project to be put on hold months later as the financial crisis hit billions of dollars worth of projects in Dubai.-Reuters