Nakheel , a Dubai-based developer, has used only 41.5 per cent, or Dh11.15 billion, from a total commitment of Dh26.78bn by the Dubai Financial Support Fund (DFSF), while it managed to slash trade claims down by 70 per cent to Dh17.61bn from Dh59.32bn.
“As at March 31, 2012, the total amount of funding invested by the DFSF (directly or indirectly) in Nakheel pursuant to the Nakheel restructuring was approximately Dh11.15bn, from a total commitment of Dh26.78bn,” according to information stated in the planned sovereign bond prospectus.
In addition to DFSF funding, the government (acting through the Department of Finance) has provided a performance guarantee of Nakheel ‘s post-restructuring obligations arising under an amended ijara facility of Dh903 million, which matures in 2017.
The company’s restructuring caused trade and financial claims against it to be reduced from Dh59.32bn to Dh17.61bn as a result of a substantial recapitalisation of the business through the injection of new capital and the equitisation of existing claims by the government through the DFSF, the prospectus said.
The DFSF, the document said, has committed to investing Dh8.88 billion across two tranches as equity into the Nakheel holding companies. This funding shall be used, amongst other things, to meet payments of interest/profit/rental, fees and debt service due in respect of the restated facilities, for distributions to trade creditors, to implement the developer’s operational plan and for general corporate purposes and contingencies.
About Dh3.8bn of sukuk certificates were outstanding as at March 31, 2012, the prospectus said.
Nakheel held a formal meeting with creditor banks to present the restructuring of certain existing indebtedness and certain of its subsidiaries together with any related security and guarantees in respect thereof on July 14, 2010. The terms of the restructuring were approved and was implemented in August 2011.
Nakheel continues to offer its customers that remain invested in suspended, cancelled and longer-term projects the option of receiving an assignable credit (equivalent to 100 per cent of their instalment payments) and the option to exchange their unit in such projects for a unit in an ongoing project at current market values, the prospectus mentions.
Those customers invested in suspended, cancelled and longer-term projects that do not want to exchange their unit for a unit in a project nearing completion will either move onto a revised payment schedule in respect of their unit, or hold their assignable credit until March 31, 2015. Customers may also to exchange their credit during this period for property in a near-term project, but customers still holding credits on March 31, 2015 will be given cash equal to the face value of that credit.
