Nakheel begins settlement deals for creditors

Developer to pay cash and securities as Emaar breaches AED4 per share

The company is to pay cash and securities to creditors
The company is to pay cash and securities to creditors

Nakheel, the beleaguered developer at the heart of Dubai World, yesterday began signing two-part cash and securities settlement agreements to pay creditors, according to an email statement to newswires.

The company, which is restructuring more than US $10 billion in debts following a bailout by its parent partly funded by Abu Dhabi, is to pay 40% of the amount owed in cash and an annual return of 10% on the recovered claims, with the remaining 60 in listed securities.

Nakheel said creditors would receive cash “as soon as an agreement on 65% of the total agreed claims” is reached.

“This is expected to be achieved in the very near future,” the company said. “All indications suggest that this will be a prompt process.”

Last November Dubai requested an extension on its bond maturities on the back of defaults of two subsidiaries of Dubai World, the state owned conglomerate, one of which was Nakheel.

The property developer was believed to have received most of the US $10 billion injection from Dubai that the emirate received from Abu Dhabi in emergency funds.

Dubai World is now able to pay Nakheel’s Islamic bonds to international creditors that mature this year and in 2011, as well as paying banks in five- and eight-year debt tranches. Around 90 banks were said to be exposed, according to reports.

Meanwhile, Istithmar World PJSC, one of Dubai World’s investment units, is arranging as much as $350 million of staple financing to attract bidders to its Inchcape Shipping Services, according to Bloomberg.

The attempted money raising is one of the leading deals in leveraged buyouts – in which private equity firms borrow to fund a take-over using the target company’s cash flow as part of the payback. The sector took a severe hit during the financial crisis whereby companies were left with loans they could not sell on. Now private equity firms are looking to capitalize on rising asset values to increase the amount they raise from banks.

National General Insurance, the DFMI-listed insurance firm, revealed that its investment property assets remained the same as last year , with a combined value of AED171,005,260

In a muted day of construction and material company stocks trading yesterday in Dubai, the DFMI slipped yesterday to 1.8 from 1.82 and continued the fall from 1.86 seven days ago and the 1.98 peak for the month on 5th April – the highest the index reached this year.

This morning Emaar continued to steal a march on developer rivals, up more than 1% to breach the AED4 per share mark and up more than 2.5% for the week from AED3.85.

Arabtec has seen a similar rise over this week, closing up to 2.49 to match its best performance this year and up from 2.67 on 22nd April. This morning it was also gaining around 0.4%. Deyaar was also up more than 1.6%.

In Riyal, KSA, the Tadawul All Share Index continued its jump for the week, up to 6,929 from 6,714 last Tuesday. However, Saudi Cement Company and Qassim Cement Company saw 0.63% and 0.75% shaved off their share value respectively, down to SR78.75 and SR72.75.

Saudi Cable Company and Makkah Construction & Development Company saw respective declines of 0.75% and 0.65% to close at SR20.10 and SR30.50.

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