Dubai: Trade creditors ofmaster developer Nakheel yesterday began signing agreements on a full repayment in cash and new debt, the company said.
The repayment, to Nakheel contractors and suppliers, would be in the form of 40 per cent cash and 60 per cent tradable security with an annual return of 10 per cent, Nakheel said yesterday.
The developer said earlier that each of Nakheel's individual trade creditors would receive a cash payment of up to Dh500,000. "Half of the contractors by number have balances of up to Dh500,000 and therefore will have their balances settled in full," it said.
Haissam Arabi, chief executive and fund manager of GulfMENA Alternative Investments, said the contractor can take that tradable security and transfer it immediately into cash. "Which also gets reinvested down the chain and brings liquidity into the sector… moving the econ-omic cycle," he said.
Proposal
Last month, the developer's parent company, Dubai World presented a proposal to its creditors restructuring a total of $23.5 billion in debt.
Excluding claims by Dubai Financial Support Fund (DFSF) that helped pay off maturing Nakheel sukuk last year, bankers have yet to settle on terms around $14.2 billion of debt. Through the support fund, the government injected $9.5 billion into the conglomerate, of which $8 billion was provided directly to Nakheel. It also said it would convert a $1.2 billion debt claim in Nakheel into equity. The claim led to the transfer of Nakheel from a Dubai World subsidiary to being a state-owned entity.
DFSF, which also committed to pay off interest payments to creditors arising from the new debt issued, said it would convert the $8 billion funding into Dubai World to equity, conditional on a "successful closing of Nakheel and Dubai World restructuring," it said earlier.
The market continues to await an agreement on restructuring proposal terms by Dubai World creditors.
