Nakheel has announced that it has secured settlement on 50 per cent of agreed claims with contractors and suppliers and other trade creditors, still short of the 65 per cent required. Nakheel officials met with senior members from the UAE Contactors Association recently as part of its efforts to ensure the settlement of claims to its trade creditors as part of its recapitalisation plan according to Gulf News.
"During the talks, Nakheel assured the Contactors Association of the significant progress made, and clarified the need for continued cooperation from its trade creditors," a statement said. Under the recapitalisation plan announced by Nakheel last month, trade creditors are offered 100 per cent recovery of their agreed claims through a 40 per cent cash payment and 60 per cent in the form of a publicly tradable security, carrying a 10 per cent annual return.
"Within a month of presenting its trade creditors with a settlement agreement offering them 100 per cent recovery of agreed claims, Nakheel has now secured the agreement of many of its trade creditors, representing claims of approximately US$1.6 billion," Nakheel said.
The 40 per cent cash payment will be paid to trade creditors as soon as an agreement of 65 per cent of the total agreed claims by trade creditors is reached. Contractors and economists welcomed the news, saying it will boost liquidity in the market and help contractors and suppliers move ahead. Nakheel's success in concluding the deals should help to boost business confidence in the market.
Nakheel said it remains, "optimistic of reaching a final settlement as a precursor to making a 40 per cent cash payment to its trade creditors."
The proposal is part of Dubai's US$9.5 billion rescue plan for Nakheel's parent, state-owned Dubai World unveiled in March. The conglomerate is in talks with lenders to restructure US$26 billion in debt.