ID :
94830
Mon, 12/14/2009 - 14:17
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https://oananews.org//node/94830
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Nakheel expected to clear the air about Dubai World
Dubai, Dec 14, 2009 (WAM) - As Nakheel's US$4 billion (Dh14.6 billion) Sukuk matures on Monday, some clarity will be shed on the six-month ‘standstill' that its parent company, Dubai World, sought from creditors on November 25 according to a report in "Gulf News".
Additionally, Dubai World has also said that it wants to restructure US$26 billion of the group's debts, mainly those of property developers Nakheel and Limitless.
Some reports suggest Dubai World might pay part of the debt on schedule, but it remains unclear whether an agreement has been reached between the conglomerate and its creditors.
"There is a reasonable chance that a deal can be reached that would avoid the need to test whether creditors will be able to obtain satisfaction through the courts [in Dubai, the special jurisdiction of the Dubai International Finance Centre or England]," said a report by Economist Intelligence Unit (EIU).
Another issue that remains to be seen is how the Dubai courts will handle the restructuring of Nakheel's Sukuk. If it is treated as an Islamic product, there would be a share of profits and loss between the company and its creditors, but it might also be dealt with as a bond.
The latter would require Dubai World to repay the debt, while the former would leave creditors sharing some of the company's losses.
"Either the creditors would reject the standstill and declare Nakheel to be in default, setting in train a long and painful legal process, or a deal can be reached providing for a partial payment of Nakheel's Sukuk and a refinancing.
Either outcome would only deal with the initial Nakheel payment due today; there would then have to be further discussions about the remaining US$22 billion," the report said.
BNP Paribas and EFG-Hermes analysts said last week Nakheel may repay bondholders as much as 70 cents on the dollar and issue new securities.
"Such an outcome would be beneficial for both parties involved," EFG's Dubai-based strategist Fahd Iqbal wrote in a research report. "Creditors would receive a portion of their money back with a promise for the remainder to be delivered at a later stage while Dubai World, along with other government-related parties, would have continued access to capital markets."
While Dubai's government owns 100 per cent of Dubai World, it hasn't guaranteed the company's debts and creditors must help it restructure, Abdul Rahman Al Saleh, director general of Dubai's Department of Finance, had said on November 30. Dubai World may need more than six months to complete its debt restructuring, Al Saleh had told the Al Arabiya TV channel on December 8.
Additionally, Dubai World has also said that it wants to restructure US$26 billion of the group's debts, mainly those of property developers Nakheel and Limitless.
Some reports suggest Dubai World might pay part of the debt on schedule, but it remains unclear whether an agreement has been reached between the conglomerate and its creditors.
"There is a reasonable chance that a deal can be reached that would avoid the need to test whether creditors will be able to obtain satisfaction through the courts [in Dubai, the special jurisdiction of the Dubai International Finance Centre or England]," said a report by Economist Intelligence Unit (EIU).
Another issue that remains to be seen is how the Dubai courts will handle the restructuring of Nakheel's Sukuk. If it is treated as an Islamic product, there would be a share of profits and loss between the company and its creditors, but it might also be dealt with as a bond.
The latter would require Dubai World to repay the debt, while the former would leave creditors sharing some of the company's losses.
"Either the creditors would reject the standstill and declare Nakheel to be in default, setting in train a long and painful legal process, or a deal can be reached providing for a partial payment of Nakheel's Sukuk and a refinancing.
Either outcome would only deal with the initial Nakheel payment due today; there would then have to be further discussions about the remaining US$22 billion," the report said.
BNP Paribas and EFG-Hermes analysts said last week Nakheel may repay bondholders as much as 70 cents on the dollar and issue new securities.
"Such an outcome would be beneficial for both parties involved," EFG's Dubai-based strategist Fahd Iqbal wrote in a research report. "Creditors would receive a portion of their money back with a promise for the remainder to be delivered at a later stage while Dubai World, along with other government-related parties, would have continued access to capital markets."
While Dubai's government owns 100 per cent of Dubai World, it hasn't guaranteed the company's debts and creditors must help it restructure, Abdul Rahman Al Saleh, director general of Dubai's Department of Finance, had said on November 30. Dubai World may need more than six months to complete its debt restructuring, Al Saleh had told the Al Arabiya TV channel on December 8.
