DUBAI, (Reuters) – Dubai World’s property arm Nakheel has delayed offering an Islamic bond, or sukuk, until July as part of its $10.9 billion debt restructuring plan, two sources familiar with the matter said.
The developer, which overstretched itself with projects such as islands in the shape of palm trees, has said it expected its debt restructuring process, including the sukuk issue, to be completed by the end of the first half of 2011.
“The end of June was always an ambitious goal,” one of the sources told Reuters, speaking on the condition of anonymity.
“This is a very complicated transaction, involving lots of individual negotiations and dealings with multiple trade creditors. The sukuk will be issued in July.”
Both sources said the delay was largely administrative.
Nakheel could not immediately comment when contacted by Reuters.
Under Nakheel’s restructuring proposal, trade creditors would receive repayment through 40 percent cash and 60 percent in the form of a $1.63 billion Islamic bond.
The developer, which is also negotiating a debt deal with its financial creditors, said earlier in June it had secured over 98 percent approval for the plan from banks.
The developer’s inability to meet its debt obligations, in the wake of a property collapse and the global credit crunch, helped trigger Dubai’s debt crisis in 2009.
The planned sukuk was already been offered at a discount in the secondary market by trade creditors.
Earlier this month, chief executive Chris O’Donnell left after ending a five-year contract.