Dubai: Nakheel, developer of Dubai's unique Palm islands, yesterday said it has paid Dh3.9 billion to its trade creditors following the recapitalisation by the Dubai Government.
"We are delighted to announce that Nakheel has to date made payments of Dh3.9 billion to its trade creditors," a Nakheel spokesperson said in an e-mailed statement.
"Today's announcement marks significant progress in our recapitalisation plan, following on from the initial payments to trade creditors of Dh500,000 or less, which commenced in March 2010."
Nakheel in 2008 held one of the emirate's largest land banks for freehold property development with a portfolio value touching $100 billion.
It faced a major financial crisis due to its overexposure to the market that saw liquidity disappear from September 2008 when the global financial crisis hit.
This prompted many developers including Nakheel to postpone a number of unfinished projects and shelve others in the pipeline.
As a result hundreds of contractors, subcontractors and suppliers, together grouped under trade creditors started to suffer due to non-payment of bills, resulting in job losses. Some small traders even went out of business. The company has also secured acceptance by creditors representing 91 per cent of its debt for restructuring.
"Nakheel has approximately 91 per cent (by value) of acceptances and is working closely with the rest of our trade creditors to achieve its 95 per cent acceptance of all payables and claims by the end of the first quarter of the current year," the spokesperson said.
Following the standstill request by its parent company Dubai World, the company underwent restructuring that saw the Dubai government pump in Dh8 billion liquidity to bring the developer back to business.
Nakheel then started paying its trade creditors based on a formula.
"This is very positive news and comes in the new year," Sudhir Kumar, Managing Director real estate advisory Realtors' International, told Gulf News.
"This reflects the very fact that the developer is coming back to business and this is going to help the emirate's property sector in a big way."