Routine delayed sukuk: Nakheel

Plans by Nakheel properties to issue Dh4.8 billion sukuk (Islamic bonds) to creditors in the first half of 2011 have been delayed by routine procedures but they remain the company’s top priority, its chairman has said.

Ali Rashid Lootah said the company, which has been locked in a restructuring programmes, would still issue sukuk in the near future but he provided no dates in his remarks to the semi official daily Alittihad on Wednesday.

“Nakheel had spared no effort to issue sukuk on time in the first half of this year but a number of routine administrative procedures took more time than had been expected or planned as they coincided with the summer vacations,” he said.

“Nakheel is still placing this issue on top of its priorities in the current period as it is fully aware of the positive effects of this process and its impact on the interests of contractors and trade creditors and the property sector in general.”

Nakheel had said it would issue Dh4.8 billion sukuk to lenders before the end of the first half of 2011 but delayed the issue to the end of July after it secured approval by all creditors.  The developer has offered trade creditors repayment of 40 percent cash and the remaining 60 percent in the form of sukuk. Once its restructuring is complete, Nakheel will be owned by the Dubai government Lootah said Nakheel would still push ahead with the sukuk issue in the near future, adding that the company enjoys “high liquidity levels and strong financial position” given the “fair value” of its trade and property assets.

“There is no doubt this will open the way to a new phase of growth in the coming period…Nakheel is using the government’s financial support according to its actual needs and it will not need further support in the next stage,” he said, referring to the $9.5 billion (Dh34.8 billion) provided by the Dubai government, including $$eight billion to Nakheel and $1.5 billion to Dubai World.

In press comments on Tuesday, Lootah said Nakheel does not mind that banks buy debt by its creditors following reports that a Hong-Kong-based bank has approached trade creditors of Nakheel with an aim to buying the claims.

The move by SC Lowy Financial is the first clear sign that distressed players are circling Nakheel's $10.9 billion debt restructuring.

“Trade and financial creditors of Nakheel are free to deal with their dues the way they want whether by transferring or selling them to others…Nakheel does not interfere in such negotiations because it is a matter between the creditors and investment banks which seek to buy debt,” Lootah said.

“The reports that banks are now negotiating with Nakheel’s creditors in this respect illustrate the absolute confidence of these banks in Nakheel’s ability to pay back debt and issue sukuk as part of a settlement.”

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