Nakheel trade creditors to get 10 pct on bond
Dubai property developer Nakheel’s trade creditors, unpaid for months, will be offered a hefty 10 percent return, a starting point for negotiations with trade creditors of the company, on a planned Islamic bond as Dubai tries to unblock a cycle of stalled bill payments to kick start its economy.
Dubai unveiled a $9.5 billion (6.1 billion pounds) rescue plan for Nakheel’s parent, state-owned Dubai World, last month, which calls for Nakheel’s trade creditors to get repayment of 40 percent in cash and 60 percent in a tradable security.
The offer is a generous one — especially in light of Dubai World’s opening offer to bank lenders of just one percent on two new tranches of debt maturing in five and eight years — and signals the trade creditors’ dominant position in debt talks.
The government is placing a great deal of importance on trade creditors because if they do not receive cash flow, it will put pressure on construction and real estate markets, which will affect workers at the firms and hurt the overall economy, he said.