Dubai's Nakheel says to repay $1.5bn debt early

June 25, 2014 - 11:49:01 am

DUBAI: Dubai property developer Nakheel will repay all its outstanding debt to banks by August this year, four years ahead of the schedule mandated by its restructuring plan, the state-run company's chairman said on Wednesday.

The repayments will total 5.54 billion dirhams ($1.5 billion), and will be funded from Nakheel's own resources rather than support from the Dubai government, Ali Rashid Lootah told a news conference.

Nakheel's announcement was another sign that Dubai, and the balance sheets of its state-linked firms, are recovering strongly from the emirate's 2008-2009 property market crash.

Nakheel was a prominent casualty of the crash, which pushed it close to default and forced it to restructure its debt. But in April this year, the company reported a 28 percent year-on-year increase in first-quarter net profit to 629 million dirhams, on revenues of 1.37 billion dirhams.

In February, Nakheel said it had initiated early repayment of 2.35 billion dirhams of bank debt 18 months ahead of maturity in September 2015.

Lootah said the early debt repayments were made possible by cash collections of 25 billlion dirhams between 2010 and 2014 as it delivered properties.

He also indicated that after emerging from the crash, the company was keen on building new properties in the hospitality, retail and leasing sectors. Nakheel plans to build 10 hospitality projects in under three years and invest 4 billion dirhams in that sector, he said.

"We have healthy cash flow and and we expect it to remain positive. We're not restricted by the restructuring," Lootah said, adding that local banks were no longer restraining themselves from lending so it was easier to obtain funding.

Nakheel will look at raising new funding by the end of this year and all options are open, including conventional bonds, sukuk and an initial public offer of its shares, Lootah said.

He said he was not worried that soaring Dubai property prices, which have jumped roughly a third in the past 12 months, might destabilise the economy, as the company was still seeing its sales increase. (Reuters)