Dubai: Developer Nakheel has negotiated contractor claims worth Dh1 billion so far and hopes to issue the second tranche of its Islamic bond within the next six months, its chairman said yesterday.

"So far we have been successful in the negotiations," Ali Rashid Lootah told reporters at the Nakheel headquarters in the man-made island Palm Jumeirah. "We dealt with the claims of Dh1 billion," Lootah said.

The indebted developer, which issued the first tranche of a $1.31 billion sukuk to trade creditors in August as part of its restructuring, said the second tranche of Dh1 billion would be to settle claims of the contractors.

The contractors would be repaid up to 40 per cent in cash and 60 per cent via the bond, Lootah said.

"We hope to issue the sukuk in the first half of the year," he added.

He declined to comment on how many contractor claims were pending and the value of these claims.

Nakheel completed the restructuring of a total of $16.06 billion in debt, including $8.71 billion of government debt which is to be converted into equity.

The company, which was previously the property arm of Dubai World, is now controlled by the Dubai government along with another debt ridden property firm Limitless, that is restructuring a $1.2 billion loan of its own.

Top priority

Lootah said after the restructuring, the company's priority is to repay the contractors and to regain the confidence of investors.

"People are trusting Nakheel again... we are getting contractors who want to bid for some of our new projects," he said.

He said the company is on track to deliver 7,000 units by end of the year and is also tendering new contracts in its retail segments.

However, Nakheel's two other planned man-made islands, the Palm Jebel Ali and Palm Deira, are not to be developed soon, said Lootah.

"They are long-term projects," he said.