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One debt down
The Abu Dhabi government has given Dubai $10 billion to help pay off its debt, including Nakheel’s $3.52 billion Islamic bond that matures today.
December 14, 2009 11:39 by Dana El Baltaji
Dubai government’s announcement that the Dubai Financial Support Fund received $10 billion from the government of Abu Dhabi to help Dubai World, a state-owned conglomerate, meet its financial obligations came only hours before Nakheel’s deadline.
Nakheel, the developer behind The Palm islands in Dubai, and a subsidiary of Dubai World, is due to repay creditors on Monday $3.52 billion, plus another $580 million in interest. The developer saw a loss of AED13.4 billion ($3.65 billion) during the first half of the year, with revenues falling to AED1.97 billion, 78 percent less compared to the same period last year.
The funds from the Abu Dhabi government will go toward paying off Nakheel’s debt, in addition to repaying existing creditors, explained Sheikh Ahmad Bin Saeed Al Maktoum, chairman of the Dubai Supreme Fiscal Committee, in statement released on December 14.
He said: “The remaining funds would also provide for interest expenses and company working capital through April 30, 2010 – conditioned on the company being successful in negotiating a standstill as previously announced”
“In addition, the Government of Dubai is particularly focused on addressing the concerns of Dubai World trade creditors within the Emirate of Dubai. To help address these concerns, today the Government of Dubai is announcing that the remainder of the funds provided will be used for the satisfaction of obligations to existing trade creditors and contractors. Discussions with affected contractors will begin in short order,” he added.
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