Limitless restructures $1.2b loan

Dubai : Limitless LLC, Dubai-based developer, reached an agreement with its creditors to alter the terms on a $1.2 billion (Dh4.41 billion) Islamic loan initially due to mature in March 2010, two bankers with knowledge of the matter said.

Lenders will get a profit rate equivalent to interest of 175 basis points over the London interbank offered rate under the new terms and the loan will be extended by five years, the bankers said, declining to be identified because the matter is private.

An Islamic loan is backed by assets and pays a profit rate to comply with Islam's ban on paying interest.

"Private discussions continue with our lenders," Rebecca Rees, a spokeswoman for Limitless, said yesterday.

The developer has almost restructured the $1.2 billion loan, Limitless Chairman Ali Rashed Lootah said on February 23. Dubai World, one of the three main state-controlled holding companies, reached a deal with about 80 banks to delay payments on $25 billion (Dh91.80 billion) of debt, while Dubai Group LLC is seeking to restructure $6 billion of bank debt.

The yield on the Dubai government's 6.396 per cent Islamic bond due November 2014 was little changed at 4.34 per cent in Dubai yesterday. The yield has dropped 123 basis points this year. The average yield on Islamic bonds sold by companies in the six-nation Gulf Cooperation Council has dropped 150 basis points in the period to 4.54 per cent, according to the HSBC/Nasdaq Dubai GCC Corporate Sukuk Index.

Limitless, which was put under management of Dubai property developer Nakheel in July 2010, raised its loan in dollars and UAE dirhams in 2008 from a group of 18 banks.

Emirates NBD and National Bank of Abu Dhabi helped raise the loan, while Royal Bank of Scotland Group Plc was among the lenders.

In January, the company, whose projects include the mixed-use Downtown Jebel Ali development in Dubai and another in Riyadh, Saudi Arabia, received a seventh extension on the loan until April.