The struggling real estate developer behind Dubai's manmade islands said Wednesday it has support from more than 90 percent of its nonbank creditors for its debt restructuring plan.
Nakheel, a division of debt-laden state conglomerate Dubai World, has been trying for months to convince creditors to accept new repayment terms on at least $10.5 billion in unpaid bills. It had hoped to complete the process by year's end, but now looks likely to miss that target.
The company is negotiating both with financial creditors such as banks, and with dozens of trade creditors including contractors and suppliers still waiting to be made good on long-delayed back payments.
The goal was to sign on at least 95 percent of its trade creditors by the end of the year in order to move forward with the restructuring.
"Nakheel is pleased to announce that 91 percent (by value) of trade creditor accounts payable has been finalized in signed restructuring undertakings," the company said in a brief statement Wednesday. "We continue to work to achieve the required 95 percent restructuring threshold."
Trade creditors have been offered full repayment, but not all in cash. Nakheel is offering 40 percent of their claims in cash, and the remainder in a type of tradable bond.
In September, Nakheel Chief Executive Chris O'Donnell told The Associated Press he expected to complete the restructuring of all Nakheel's debts by the end of this year.
Little progress appears to have been made since then. Nakheel said at the end of September it had reached restructuring agreements with trade creditors holding 85 percent of the value of claims against the developer.
A spokeswoman was unable to say where talks stand with the company's financial creditors Wednesday.
Resolving Nakheel's acute debt problems would go a long way in alleviating the financial pressure still weighing on Dubai. Nakheel's parent Dubai World managed to secure full creditor support for its $24.9 billion debt restructuring plan in late October. But untangling the property division's credit problems has proved more difficult.
Nakheel, which borrowed heavily to build islands in the shape of palm trees and a map of the world, was at the center of the city-state's financial crisis that erupted last year. Its ability to generate cash has been hobbled by a severe property slump in the emirate, where prices have dropped by roughly half since late 2008.