Wednesday, Jan 23, 2013
DUBAI (Zawya Dow Jones)--The chairman of Dubai government-owned developer Nakheel hit back at a report suggesting his company may have difficulties repaying a $1.1 billion Islamic bond and about $2 billion of bank debt due in 2016 with its own resources.
Nakheel, which restructured debt and got financial assistance from the government following Dubai's real estate market crash four years ago, is in a good financial position and has about $600 million of cash on its balance sheet, Ali Rashid Lootah said at a press conference on Wednesday.
"We will prove them wrong," Mr. Lootah said.
The comments followed a recent report from analysts at boutique investment bank Exotix that estimated Nakheel would be 70% short of the funds necessary to repay the debt.
"While we think that Dubai's real estate market is recovering and that Nakheel's headline results have been positive post-restructuring, we do not expect the issuer to produce more than $700 to $800 million in cumulative internal cash by 2016," the report said.
Exotix said Nakheel would need further government support, but that the debt came due at a "precarious time," when a number of other Dubai government-related entities had borrowings to repay. The analysts calculated there was $7.5 billion of restructured debt at government companies maturing in 2015 and the first half of 2016.
Mr. Lootah said Nakheel still had about 15.2 billion U.A.E. dirhams ($4.14 billion) to draw on from the Dubai Financial Support Fund, or DFSF, a body established in 2009 to distribute aid to the emirate's struggling companies.
Nakheel had received AED11.58 billion from the DFSF as of the end of last year, according to the prospectus for $1.25 billion sukuk issued by Dubai's government Tuesday. The DFSF had committed to provide AED26.78 billion, the document said.
Nakheel issued the Islamic bond, or sukuk, as part of its restructuring settlement with contractors and other trade creditors. Further sukuk shares will be issued to the contractors before the end of the first half, Mr. Lootah said.
Write to Leila Hatoum and Asa Fitch at leila.hatoum@dowjones.com
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(END) Dow Jones Newswires
23-01-13 1027GMT