Nakheel, builder of man-made islands in the shape of palms, is in talks to extend an Dhs8 billion dirhams ($2.18 billion) loan due in 2015, the indebted developer’s chairman was quoted in a local newspaper as saying on Sunday.
Ali Rashid Lootah dismissed concerns over Nakheel’s ability to repay its debts, which also includes a Dhs3.8 billion sukuk, or Islamic bond, due in August 2016, according to Abu Dhabi-based newspaper, The National.
The government-owned developer agreed a $16-billion debt restructuring in 2011 and has scaled back grandiose plans, such as building a one-kilometre high tower after it was one of the most high profile corporate casualties of a Dubai property crash that sent house prices tumbling about 60 per cent from 2008 peaks.
Debts held by Nakheel, owned at the time by flagship conglomerate Dubai World helped trigger the emirate’s 2009 debt crisis. A last-minute bailout by Abu Dhabi helped Dubai avert a bond default on a Nakheel bond in December 2009.
“We are talking to financial institutions to restructure our loan, which is a normal part of business because the original tenure is very short,” Lootah was quoted as saying.
“We have time but we are talking to them from now and engaging them from now to get a longer term. We are not worried about the sukuk. Our strategy first will be deal with the lenders. The sukuk is a secondary issue to that.”
Nakheel reported a 57 per cent rise in annual profit in January. It also made interest and profit payments of around Dhs800 million to lenders last year and has now paid around Dhs10 billion to various trade creditors and contractors since the start of its debt restructuring.
“We have sorted all the old issues, most of the old issues,” Lootah told the newspaper.
But he ruled out re-starting work on Palm Jebel Ali, one of three man-made islands in the shape of palm fronds that Nakheel planned to build off the Dubai coast. Of these, only one – Palm Jumeirah – has been completed.
“Nakheel will grow and grow and grow in a more careful manner and with a more well-studied strategy and plan,” Lootah was quoted as saying. “Tourism is booming in Dubai so people are looking for more options, so we are looking at that.”
Last week, Dubai gave the go-ahead for a new $1.6 billion artificial island – not connected to Nakheel – as it again unveils extravagant developments, despite the emirate being littered with stalled or abandoned projects commissioned in the boom years of the previous decade.