Dubai: Nakheel, the Dubai-based real estate developer, is on track to issue a $1.63 billion Islamic bond, or sukuk, by the end of the first quarter, the company's chairman said yesterday.
Ali Rashid Lootah also said the company would not require any further financial commitment from the Dubai Government as it presses ahead with its restructuring plans.
Nakheel, the property arm of the Dubai Government conglomerate Dubai World, is undertaking a massive $10.9 billion restructuring process in a bid to repay its trade creditors, who have been offered 40 per cent of what they owe in cash and the rest through an Islamic bond.
The Dubai Government said in March last year it would provide Nakheel $8 billion in cash so that it could pay contractors and complete stalled development projects.
"We will not need any more commitment from the Dubai government further to what they have already committed. The government pays us when required but we have money in the bank," Lootah said yesterday.
Nakheel, the developer of several island projects off the coast of Dubai, also moved yesterday to deny recent media reports that one of its flagship projects, The World, was sinking back into the sea.
Earlier this week, the developer successfully defended an application by Penguin Marine, the company contracted to provide transportation to the archipelago, to restrain the calling of two performance bonds. A lawyer acting on behalf of Penguin Marine said during The Special Tribunal Related to Dubai World that "the islands are gradually falling back into the sea".
But Nakheel said in a statement yesterday: "The World Islands are not sinking. Our periodical monitoring survey over the past three years has not observed any substantial erosion that requires sand nourishment and there is no issue with the stability of The World Islands."
Lootah said that 70 per cent of The World's 300 artificial islands have already been sold and that physical construction work had started on two developments.
Construction has begun on the Heart of Europe, a project by Austrian developer Josef Kleindienst and Lebanon, which is being developed by Indian investor Wakheel Ahmad.
Kleindienst, the owner of Kleindienst Group, which has bought six islands on the development, told Gulf News in an earlier interview that he had initial work at the islands conducted by a Dubai-based contractor.
He also said there was not an issue over unstable soil at the project.
He said: "Foundation work is necessary to stabilise the soil on which villas will be built later. The soil stabilisation is conducted to ensure the height of the islands remains three metres above sea level. After that, the islands have lifetime stability and construction can start."
The soil improvement operation, called "vibro-compaction", involves the use of electric depth vibrators that mechanically agitate and lock sand particles together at depths of 18 to 20 metres in order to ensure all construction on the islands is stable.
—With inputs from Arno Maierbrugger, Deputy Business Editor