Nakheel arrears less than feared, says Arabtec
Dubai, May 27, 2010
Cash-strapped Dubai developer Nakheel is not in arrears to Arabtec as much as some analysts fear, said Ziad Makhzoumi, chief financial officer of the largest builder in the UAE.
Arabec, which expects to receive an overdue payment by end-June following developer Nakheel's debt restructuring, is well-funded after managing its cash resources carefully during the downturn, Makhzoumi told Reuters Insider.
"It is not as big as the market expects," he said, referring to the payment but declining to say how much Arabtec would get from the developer, a unit of state-owned conglomerate Dubai World.
"We are well funded. We manage our cash aggressively ... it was never in doubt we have enough cash," he said.
"We would have liked to have been in a better situation (in terms of liquidity) but the whole world is collapsing. Countries are collapsing let alone companies," he said.
Some analysts have put the figure Nakheel owes Arabtec at around 2 billion dirhams ($545 million), while UBS' Saud Masud has estimated it to be between a half and one billion dirhams.
Dubai World and its core creditor banks have agreed on a proposal to restructure $23.5 billion in debt. As part of the proposal, Nakheel trade creditors have been offered full repayment, with 40 percent in cash and 60 percent in the form of an Islamic bond, or sukuk, which has a 10 percent annual return.
Arabtec expects the Nakheel payment by end-June, while payment in the form of bonds could take several months, its chief executive Riad Kamal said on Monday.
Kamal said Nakheel's cash would be circulated to pay Arabtec's suppliers and subcontractors in the United Arab Emirates, adding the firm would not need to raise additional cash for its projects outside the Gulf state.
Arabtec last week said it signed on to Nakheel's debt repayment offer and urged others to follow suit.
Kamal said then that the "door is still open" for future co-operation with Abu Dhabi's Aabar Investments after both firms called off their $1.7 billion merger in April. The builder reported a 17 percent slide in net attributable profit to 134.5 million dirhams in the first quarter. - Reuters