By Matt Smith / Reuters
DUBAI: The second tranche of a sukuk from Dubai’s Nakheel will be 240 million dirhams ($65 million) in size, less than a quarter of the expected value, after the property developer persuaded trade creditors to accept a huge discount on their original claims.
Nakheel will issue further tranches, a spokeswoman said, with some claims from trade creditors yet to be resolved. She declined to reveal the value of these claims.
The sukuk is part of a $16 billion debt restructuring by Nakheel, which overstretched itself building palm-shaped islands and other ambitious projects.
The sukuk’s first portion — a five-year bond worth 3.8 billion dirhams ($1.03 billion) paying a 10 percent profit rate — was issued in August last year.
At the time, Nakheel’s chairman said the sukuk would be worth 4.8 billion dirhams in total, leaving 1 billion dirhams to be issued in later tranches.
“The second tranche, I think, will be launched by the end of this month. We are trying to get it out by the end of this month hopefully. It will be all the same terms,” Nakheel Chairman Ali Rashid Lootah told reporters.
“There still some negotiations going on. What we have negotiated so far are claims worth 2.7 billion dirhams and we will be paying the contractors 400 million dirhams out of 2.7 billion dirhams.
“The cash is 40 percent of the 400 million (dirhams), which we have already paid them, the 60 percent will be the sukuk.”
Lootah said the sukuk would be listed on the Nasdaq Dubai bourse “as soon as is practical”, adding the second tranche would carry the same terms and duration as the first.
He was speaking at the launch of a luxury residential development on Palm Jumeirah. Of 104 units to be built, 30 have been bought since going on sale a week ago in what Lootah said showed renewed confidence in Dubai’s property sector.
Dubai house prices have fallen more than 60 percent from a 2008 peak.
