Dubai World's property units is in talks with construction companies before $1.2bn loan repayment falls due next month.
Limitless seeks to revise payments
Limitless, one of Dubai World's property units, is renegotiating payment schedules with construction companies on three big Dubai developments ahead of a US$1.2 billion (Dh4.4bn) loan repayment due next month. The property company's liabilities are part of the $26bn debt that Dubai World is renegotiating with creditors.
Limitless is winding down contracts on the Downtown Jebel Ali development, a business and residential centre on Sheikh Zayed Road, as well as the Arabian Canal, a huge waterway and property project that is still in its early earthmoving stages. Talks on payment for Limitless's headquarters on Emirates Road are also under way. Contractors were being paid until as recently as last month, but are now being asked to agree to a payment delay and a new schedule that could stretch repayment over four years, senior spokespeople from some of the firms said.
"We have agreed with Limitless to wind up the project and agree on a payment plan," said a spokesman from Taisei, the Japanese company that was the main contractor at Downtown Jebel Ali. "But we haven't had details - it could be a four-year payment plan," the spokesman said. "We have to understand the difficulties of Dubai World and are trying to be flexible as much as we can." The Japanese company was awarded a Dh1.3bn contract in 2007 to construct four buildings, two commercial and two residential.
The glass and steel structures, complete with plasma advertising screens projecting on to the motorway, are now ready for leasing but the rest of the development at Downtown Jebel Ali, once budgeted at $19bn, has seen little progress. At the Arabian Canal project, which is now a big hole in the ground with no buildings erected, work has also slowed to a crawl and Limitless is seeking payment delays.
Al Masaood Bergum, which supplied prefabricated office units for the Arabian Canal site, is owed about 25 per cent of its contract value. "Limitless was paying us monthly but that stopped last month," said a spokesman at the company, who declined to say how much the contract was worth. "Now they've told us they may not even be looking at payments for people until July." Dutco Balfour Beatty, which built Limitless's head office on Emirates Road, said it was in talks with Limitless on settling its final account.
"The next step is how we'll get paid - at least if they say they'll pay us over four years, you can live with that. It's when people say that they can pay us over X amount of years, but can't," said Grahame McCaig, the general manager of Dutco Balfour Beatty. Limitless declined to provide details, saying that "arrangements with contractors are confidential". The property company's pending $1.2bn Islamic loan is likely to be rolled over, according to recent reports.
Dubai World, meanwhile, hopes it can agree to a deal with creditors by April 30 to restructure its debt without necessarily formalising a standstill deal. Contractors are still waiting to be paid by the conglomerate's other property unit, Nakheel. In December, Sheikh Ahmed bin Saeed Al Maktoum, the chairman of the Dubai Supreme Fiscal Committee, said that part of a $10bn cash injection from Abu Dhabi would go towards paying contractors on Nakheel and other Dubai World projects.
Despite some contractors agreeing on a discount of 30 per cent with Nakheel on outstanding payments at the beginning of last year, most are yet to be paid. "The statement [in December] said they would start discussions with contractors, but nothing has happened so far," said the spokesman from Taisei. @Email:email@example.com