Dubai: Property developer Nakheel is paying Dh4 billion to its trade creditors over the next two weeks as it plans to restart stalled projects within two months and revisit projects on the drawing board.
"We've started delivering the second stage of the 40 per cent cash payments as per the restructuring plan to our trade creditors. A lot of work has gone into this," Ali Lootah, Chairman, said.
Trade creditors include about 1,000 contractors, suppliers, designers and all other related consultants involving more than 4,000 contracts.
His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, said in an interview last week that Dubai is on track to finish all the projects it has started.
Nakheel is doing its bit by restarting stalled projects under construction.
These are Jumeirah Park, Al Furjan, Jumeirah Village (South), Jumeirah Heights, Jumeirah Islands and Badrah at Dubai Waterfront.
"We're certain that we'll start negotiations with contractors soon and the target is to start projects again within two months," Lootah said.
One phase at a time
"There were hundreds of small accounts. To clear all of them and consolidate them per creditor is a lot in three months. We promised to do it before the end of this month and we did," Lootah said.
The first phase of repayments to those owed less than Dh500,000 has been completed. The second phase is for those owed more than that.
All payments, totalling Dh4 billion, have been initiated. Within two weeks, the transfers should be in the bank accounts of the 75 per cent of creditors who have accepted the restructuring deal, Lootah said.
"We're pumping Dh4 billion of cash into the local economy. This is good news for Dubai and the UAE economy and it would not have happened without the constant support and guidance of our government," he said.
"The effect of Nakheel, having played an important role in the evolution of Dubai's and indeed the region's real estate market, getting back into the action is good news," said Blair Hagkull, managing director, Jones Lang LaSalle, Mena.
"Dubai has continued building its infrastructure over the last two years.
The city now can accommodate significantly more economic activity and Nakheel has played an important part in this.
Market confidence
The ability to selectively complete projects that have been started certainly contributes to increased confidence in the market."
The next stage is to strike an agreement with the 25 per cent which haven't signed up to the restructuring deal and to disburse the remaining 60 per cent payable in a publicly traded security with a 10 per cent annual return.
"The next stage is to deliver the sukuk as per the restructuring plan and we're confident that we'll reach that target in the coming months.
"We want to make sure everyone agrees they deserve the deal, but we need 95 per cent to agree," Lootah said.
Projects still on the drawing board will be adapted as necessary to the changed world economic circumstances, Lootah said.
- 4,000 contracts covered under payment scheme
- 75% creditors targeted as part of restructuring deal
