Nakheel has effectively completed the restructuring of the company and its debts, clearing the way for it to concentrate on its core business, building master property developments.
The property developer was part of Dubai World, the conglomerate which shook international markets, when it requested that its debt be restructured, in late 2009. Nakheel has since signed an agreement with 90 per cent of its trade creditors and has been fully acquired by the government of Dubai. And, despite a shaky start, the professional and transparent way the debt negotiations were handled has restored investor confidence in Dubai and its companies.
But, there are lessons for the future. Perhaps the most important is that even while successful companies must take calculated risks to thrive, they must never over-extend themselves, even when times are good.
Before Nakheel needed to restructure, the easy availability of money made ever bigger projects seem financially viable. But, these projects were not sustainable in tough times, when financing and other costs were higher and consumer demand disappeared. Companies must focus on their core business and make sure their projects do not only thrive in good times, but also survive hard times. This is especially true now, when the global business and financial environment is more volatile than ever.
