Nakheel deal to lift confidence

Dubai: Nakheel on Tuesday said it has secured settlement on 50 per cent of agreed claims with trade creditors, mainly contractors and suppliers.

Nakheel officials yesterday met with senior members from the UAE Contactors Association as part of its efforts to ensure settlement of claims to its trade creditors as part of its recapitalisation plan.

Significant progress

"During the talks, Nakheel assured the Contactors Association of the significant progress made, and clarified the need for continued cooperation from its trade creditors," a statement said.

Under the recapitalisation plan announced by Nakheel last month, trade creditors are offered 100 per cent recovery of their agreed claims through a 40 per cent cash payment and 60 per cent in the form of a publicly tradable security, carrying a 10 per cent annual return.

"Within a month of presenting its trade creditors with a settlement agreement offering them 100 per cent recovery of agreed claims, Nakheel has now secured the agreement of many of its trade creditors, representing claims of approximately Dh6 billion," Nakheel said.

The 40 per cent cash payment will be paid to trade creditors as soon as an agreement of 65 per cent of the total agreed claims by trade creditors is reached.

Contractors and economists hailed the move, saying it will boost liquidity in the market and help contractors and suppliers move ahead.

Riad Kamal, Arabtec CEO, told Gulf News: "As soon as we get our part payment, we will start paying our sub-contractors and suppliers that will help the construction supply chain move ahead with liquidity."

He said under the current circumstances it's difficult to make everyone happy.

"However, we are extremely satisfied with the offer. It works well for us. Most contractors are positive on the way Nakheel is moving ahead with its repayment schedule," he said.

Nakheel's success in concluding the deals, closely watched by the industry, will help boost business confidence in the market.

Dr Mohammad Al Asoomi, a UAE-based economist, said: "The payment settlement with trade creditors will help boost liquidity in the market. This is what the market needs, especially the construction companies and material suppliers. It will also boost confidence among the business community."

Final settlement

Nakheel said it remains "optimistic of reaching a final settlement as a precursor to making a 40 per cent cash payment to its trade creditors."

Nakheel's parent company, Dubai World, is widely expected to conclude a deal to restructure its $24 billion (Dh88 billion) debt with creditors later this month.