NAKHEEL TO OFFER TRADE CREDITORS 10% RETURN ON NEW BONDS
Nakheel PJSC, the unit of Dubai World that is restructuring $10.5bn of debt, plans to pay an annual profit of 10 per cent on Islamic bonds it seeks to issue to trade creditors, according to two people familiar with the proposal.
Bloomberg reported on Wednesday, that the deal was conditional on trade creditors representing at least 95 per cent of the value of all claims agreeing to the proposal, according to the people who declined to be identified because the plan has not been made public. Nakheel planned to issue the five-year bonds in July and list the securities on Nasdaq Dubai.
If trade creditors, including contractors and suppliers, don't accept the terms, they can appeal to a tribunal established last year to resolve Dubai World related disputes, one of the people said.
A spokesman for Dubai World declined to comment when contacted by Bloomberg News.
Nakheel, the builder of palm-shaped islands off Dubai's coast, said in March trade creditors would be offered 100 per cent recovery of their claims — 40 per cent through a cash payment and 60 percent in the form of a publicly tradable security at commercial rate. The company had unpaid bills, or accounts payable and accruals, of $7.8bn) at the end of June, the last period for which financial results are available.
Dubai World, one of the emirate's three main state-owned holding companies, and Nakheel are seeking to renegotiate a total of $24.8bn of debt after the global credit crisis battered Dubai's real estate market and left the emirate's companies unable to raise loans. Dubai World asked its almost 100 creditors on March 25 to roll over liabilities into two new loans of five- and eight-year maturities.
The company is offering to pay bank creditors 1 per cent interest on new loans as part of the restructuring plan, a banker familiar with the plan said earlier this month.