Dubai's Nakheel, hit by a property slump in the emirate, said it had completed the restructuring of its $16 billion debt pile and will soon deliver pending projects and pay investors. The developer, which overstretched itself building islands in the shape of palms and other ambitious projects, will look to move past its financial worries and continue delivering projects and building new ones, its chairman promised at a press conference in Nakheel's headquarters on the Palm Jumeirah on Wednesday.
"Dubai needs Nakheel because Nakheel is a key player if we manage to bring up all these properties and new ideas, it will be an added value to the economy of Dubai," said Lootah, defending the emirate's need to continue with the firm despite having no sales and piling an enormous debt. Dubai has already given as much as $8.71 billion to the developer. The company, which was previously the property arm of Dubai World, will now be controlled by the Dubai government along with another debt ridden property firm Limitless, that is restructuring a $1.2 billion loan of its own.
Lootah said the firm will issue the first tranche of a 4.8 billion dirhams ($1.31 bln) Islamic bond to trade creditors on Thursday worth 3.8 billion dirhams ($1.03 bln) at a profit rate of 10 percent. Nakheel is restructuring a total of $16.06 billion in debt, including $8.71 billion of government debt which is to be converted into equity. The remaining amount is owed to trade creditors and banks. Bank creditors will be offered an interest rate of 4 percent over the London Interbank Offered Rate (Libor) and repayment after five years, Lootah said. The company is restructuring $2.2 billion of bank debt.
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