Nakheel recapitalised to meet obligations to customers and trade and financial creditors
Recapitalisation places Nakheel on sound footing for long term
Dubai Government to provide approximately $9 billion in financial support
All creditors - to receive 100 percent repayment of the agreed amount of their claims over time

Dubai, 25 March 2010

Nakheel today announces a comprehensive recapitalisation plan of its debt and liabilities. The plan enables Nakheel to offer creditors 100 percent of agreed amounts owed and to fulfill its obligations to customers through the prompt completion of near term projects.

Under this proposal, the Government of Dubai, through the Dubai Financial Support Fund (“DFSF”), will commit to providing approximately $8 billion of new money directly to Nakheel to fund operations and settle liabilities. In addition, the DFSF has proposed to convert its existing $1.2 billion debt claim in Nakheel into equity.

Nakheel will work with its creditors over the coming weeks to secure agreement for the recapitalisation plan. The support from the Government is conditional upon this agreement. However, ahead of a final agreement on the recapitalisation plan, an initial $1.5 billion of the new funds from the DFSF will be made available as required to Nakheel to fund contractors to continue building near-term development projects.

Going forward, Nakheel will work closely with the Government to carefully plan and evaluate future projects, ensuring that Nakheel fulfills its important role in the development of the Dubai economy.

Details of the Recapitalisation Plan

The plan provides customers and creditors with a fair and equitable recovery. It has been developed through complex and lengthy discussions with stakeholders and the Government.

Customers

- Nakheel will use a significant proportion of the funds provided by the DFSF to complete the construction of near-term projects. Nakheel will provide customers with clarity on completion and handover dates of those projects;

- Nakheel will continue to offer customers invested in longer-term projects the option of receiving credit equivalent to 100 per cent of their installment payments and swap into projects nearing completion at today’s market value. Those customers invested in longer-term projects that do not want to exchange their property for a property in a development nearing completion will be offered the option of a revised payment schedule or the option to hold the assignable credit for five years. Customers would be able to swap the credit during this period for property or land, or for cash at the end of five years. The credit would carry no interest.

Trade Creditors (Contractors and Suppliers)

Trade creditors would be offered 100 per cent recovery of their agreed claims with:

- 40 per cent through a cash payment (based on agreed claims); and
- 60 per cent in the form of a publicly tradable security (based on current claim estimate amounts) at a commercial rate.

Each of Nakheel’s individual trade creditors will shortly receive a cash payment of up to AED500,000. Half of the contractors by number have balances of up to AED500,000 and therefore will have their balances settled in full.

Financial Creditors

1. Secured bank creditors
Secured lenders under syndicated, club and bilateral facilities will receive 100 per cent of principal and accrued interest or profits through a rollover and maturity extension on existing facilities, based on EIBOR/LIBOR.

2. Sukuk holders
Assuming sufficient support for the proposal, the 2010 and 2011 Nakheel Sukuk will be paid as they fall due.

3. Unsecured bank creditors
Holders under Nakheel's unsecured Ijara Club facility will receive 100 per cent of principal and accrued interest or profits through a new debt facility with any existing third party credit support remaining in place.

4. DFSF
In addition to its new financial support provided to Nakheel, the DFSF, has proposed $1.2 billion of debt previously loaned to Nakheel into equity. The DFSF will equitise the $8 billion of funding subject to a successful closing of the Nakheel and Dubai World restructuring.

Commenting on the recapitalisation plan, Aidan Birkett, Chief Restructuring Officer of Dubai World, said:

“Today’s plan is the result of extensive discussions between the Government, Dubai World, Nakheel and our stakeholders. It offers a fair and equitable solution for creditors and customers. If agreed, this plan will provide Nakheel with a stable, financial footing, enabling it to meet its outstanding obligations to customers and to continue its role in the ongoing development of the UAE real estate market.”

Chris O’Donnell, Chief Executive Officer of Nakheel, said:

“I would like to thank our customers, suppliers and contractors for their patience during these difficult times. Today’s plan brings us a step closer to agreeing a solution that would enable Nakheel to complete work on near-term projects. The implications of this plan are therefore extremely positive for Nakheel, our stakeholders and the region as a whole, and all our efforts are now focused on reaching an agreement with creditors as soon as possible so we can implement the plan.”

Please get in touch with our partners to learn more about the recapitalisation plan.