DUBAI, (Reuters) – Dubai state-owned property developer Nakheel expects to complete its debt restructuring by the end of the year.
“We have had a successful bank meeting and we are having very good discussions with the Nakheel co-com (core committee),” chief executive Chris O’Donnell told reporters on Thursday.
Conglomerate Dubai World has near-unanimous approval for its $24.9 billion debt plan, it said this month. But Nakheel — its flagship property arm undergoing parallel negotiations — has yet to secure backing needed for the plan.
Earlier this week, Nakheel said it had about 85 percent of acceptances, by value, for its debt restructuring and was “well on target to achieve its 95 percent acceptance of all payables and claims within the near future”.
Under Nakheel’s restructuring plan, trade creditors have been offered 40 percent of what they are owed in cash and the rest through an Islamic bond, or sukuk.
Nakheel, which overstretched itself building islands in the shape of palms and other ambitious real estate developments, has restarted work on its Al Furjan residential project and expected to start building again on all short-term projects by the end of October, it said on Wednesday.
Al Shafar Transport and Contracting Co is the first contractor to restart work on Al Furjan, Nakheel said.
Al Shafar’s contract to build 300 of the 800-villa project is worth 573 million dirhams ($156 million) and expected to be completed by the end of 2011 with some handed over earlier, managing partner Tarek Zoabi told reporters on Thursday.
Dubai contractor Arabtec is to build the remaining 500 villas.
The Gulf emirate’s once-booming property market was hit hard by the financial crash as property prices fell around 60 percent and billions of dollars worth of projects were put on hold or cancelled.
Other projects that Nakheel put on hold included a planned kilometre-high tower.
On Tuesday, Nakheel said it disputed the validity of a creditor claim filed against it, saying the claim would not delay its debt deal.
“Any business faces lawsuits and issues and you have to deal with this as part of normal business,” O’Donnell said on Thursday when asked about the claim.
Nakheel repaid approximately 2.5 billion dirhams to contractors in July, it said last month.
In June, Nakheel said it planned to restart six projects in Dubai, including Jumeirah Park, Al Furjan, Jumeirah Village, parts of Jumeirah Island and Jumeirah Heights, as well as Al Badra.
It is also revisiting all other projects, including man-made islands The Palm Jebel Ali and The Palm Deira.