x Abu Dhabi, UAESunday 23 July 2017

Nakheel shows signs of bouncing back

Nakheel, the developer arm of Dubai World, has resumed work on a number of projects since the summer that had been stalled following the global downturn.

Nakheel, the developer arm of Dubai World, has resumed work on a number of projects since the summer that had been stalled following the global downturn.

It announced in August it was restarting work on six residential projects - Jumeirah Park, Al Furjan, Jumeirah Village, Jumeirah Islands Mansions, Jumeirah Heights Clusters and Al Badrah - in a clear sign it was emerging from its debt problems.

That followed the March announcement of a comprehensive recapitalisation plan, which provided a structure for the Dubai developer to pay its debts and resume work on "near-term" projects.

The deal focused US$8 billion (Dh29.38bn) in funds from the Dubai Government, administered through the Dubai Financial Support Fund (DFSF)to "fund operations and settle liabilities".

The proposal also called on the DFSF to convert $1.2bn in debt into equity.

Under terms of the plan, creditors would also receive 100 per cent of their agreed settlement, with trade creditors receiving 40 per cent in cash and 60 per cent "in the form of a publicly tradable security at a commercial rate".

Several creditors initially disputed the terms and conditions of repayment plans and eventually the Government formed a committee to represent creditors and negotiate settlement terms.

Through the course of the year, Nakheel slowly rebuilt its business. Contractors have been paid in a combination of cash and shares in a sukuk, an Islamic bond.

In October, the company said it would focus on resuming the construction of four shopping malls. "We have to enhance Nakheel financially and look for new cash," Ali Rashid Ahmed Lootah, the chairman, said at the time.

 

kbrass@thenational.ae