Nakheel debt deal soon
Property developer Nakheel expects to complete its debt restructuring process in coming months as core banks unanimously support its proposal in principle. 
The developer, which is in talks with creditors on restructuring US$10.5 billion of bank debt, asked lenders to respond to the proposal by the end of next month. 
The developer, a unit of Dubai World, met on Wednesday with its creditor banks to present the proposed recapitalisation and restructuring plan. 
Khaleej Times had reported on July 6 that the property developer would meet with bankers on July 14 to negotiate its debt restructuring. 
“The company has negotiated the terms of the restructuring with the coordinating committee of its creditor banks with the support of Dubai World and the Government of Dubai,â€Â� Nakheel said in a statement. 
“As is customary at this stage of the process, no resolution was sought in the meeting. Creditor banks will have the opportunity to review the information provided before responding to the proposal,â€Â� the statement said. 
The company plans to offer creditor banks interest of four percentage points more than benchmark rates on new loans as part of the debt restructuring, two bankers with knowledge of the plan told Bloomberg. In return, lenders would agree to extend the life of the loans by five years, they added. 
In March, Nakheel said, “Secured bank creditors, secured lenders under syndicated, club and bilateral facilities will receive 100 per cent of principal and accrued interest or profits through a rollover and maturity extension on existing facilities, based on EIBOR/LIBOR.â€Â� 
“Presentations were made by Nakheel and its advisers at today’s meeting, as well as by accounting firm KPMG and law firm Allen & Overy, advisers to the bank coordination committee,â€Â� a Nakheel spokesman said. Banks were asked to respond by August 31, the spokesman said without providing further details. 
The developer has already started making cash payments to its trade creditors under a plan unveiled by its parent company Dubai World in May. 
As part of the recapitalisation plan, trade creditors are offered 100 per cent recovery of their agreed claims, with 40 per cent cash payment, the company said, adding: “The remaining balance of 60 per cent, in the form of a publicly tradable security with a 10 per cent annual return, is expected to be issued in the coming months.â€Â� 
In March, Nakheel had announced a comprehensive restructuring plan of its debt and liabilities. The plan enables Nakheel to offer creditors 100 per cent of agreed amounts owed. Under this proposal, the Government of Dubai, through the Dubai Supreme Fiscal Committee (DSFC), committed to provide approximately US$8 billion directly to Nakheel to fund operations and settle liabilities. 
In addition, the DSFC had proposed to convert its existing US$1.2 billion debt claim in Nakheel into equity. The DSFC would equitise the US$8 billion of funding subject to a successful closing of the Nakheel and Dubai World restructuring. â€" Khaleej Times