Nakheel pays off AED3.6bn of trade creditor debt

State-backed developer has paid a total of AED3.9bn ($1.06bn) to date

Nakheel claims progress on repayment of trade creditors.
Nakheel claims progress on repayment of trade creditors.

Nakheel, the state-backed developer behind the Palm project, has paid a total of AED3.9bn ($1.06bn) to its trade creditors to date, it said on Sunday.

The developer, which is in talks to delay some $10.5bn of debt, will seek to secure the agreement of trade creditors representing 95 percent of the debt by the end of the first quarter, it said in an emailed statement.

“[This] marks significant progress in our recapitalization plan, following on from the initial payments to trade creditors of AED 500,000 or less, which commenced in March 2010,” it said.

“Nakheel has approximately 91 percent (by value) of acceptances and is working closely with the rest of our trade creditors to achieve its 95% acceptance.”

In October, Nakheel chairman Ali Rashid Lootah told reporters that the firm hoped to complete the process this year.

Under the terms of Nakheel's proposal, trade creditors will receive 40 percent in cash and 60 percent repayment through an Islamic bond with a 10 percent return.

Nakheel last week said it had secured Dubai government funds to replay its $750m Islamic bond that matures next month. The developer said it would request the Nasdaq Dubai bourse to delist it once the payment had been made.

Dubai’s government said in March it will provide $8bn in cash to Nakheel to repay trade debts and complete outstanding real-estate projects.

The company has since resumed work on real estate projects Al Furjan and Jumeirah Park.

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