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Dubai’s Nakheel plans early debt repayments
Dubai developer will not require further government support, says chairman.
January 5, 2014 9:29 by Reuters
Dubai developer Nakheel plans to repay nearly a third of its total bank debt in the first quarter of 2014, well ahead of maturity in 2015, as it benefits from a rebound in the emirate’s property sector.
Nakheel, the builder of a palm tree-shaped island off Dubai’s coast, was the most high profile casualty of the Gulf state’s property market collapse in 2009 and was taken over by the government as part of a $16 billion rescue plan in 2011.
The property market rebounded in 2013, with prices rising around 22 per cent from 2012. In the crash, they had plummeted more than 50 per cent from their 2008 peak.
As a result of the rebound, Nakheel will not require further government support and is targeting annual profit growth of 15 per cent, its chairman, Ali Rashid Lootah, told a news conference.
“We are confident that we will not touch the government funding and we will be ok without it,” Lootah told reporters.
“Where there’s a will, there’s a way. We will keep looking at ways to cut costs. When there’s a need to raise cash, we will do so,” he added.
Of the AED6.8 billion of bank debt due in 2015, Nakheel will repay around AED2.35 billion in February and another AED1.65 billion in August, the company said.
“These funds came from increased sales and also by mitigating claims of creditors,” he added.
The developer handed over 7,000 units to customers last year.
The company’s total cash outflow of AED56.9 billion that was assessed after the restructuring has been cut to AED41.3 billion, and the net deficit has dropped by AED22 billion to AED8 billion, it said in a presentation to reporters.
Nakheel will also repay a $1.2 billion Islamic bond, which it issued to trade creditors as part of its restructuring plan due in 2016, on time.
“We will have no trouble repaying on time,” Lootah said.