It is to be used to pay Arabtec's UAE suppliers and subcontractors
(ABU DHABI) Dubai builder Arabtec expects cash from developer Nakheel's debt restructuring by end-June, while payment in the form of bonds could take several months, its chief executive said yesterday.
Riad Kamal declined to say how much money Arabtec, the UAE's largest builder by market value, would get from Nakheel, a unit of state-owned conglomerate Dubai World, which announced last week that its core creditor banks had accepted proposals to restructure US$23.5 billion in debt. As part of the proposals, Nakheel's trade creditors have been offered full repayment, with 40 per cent in cash and 60 per cent in the form of an Islamic bond, or sukuk, which has a 10 per cent annual return. 'The 40 per cent (cash) will come probably in June, and the 60 per cent bonds in three to four months,' Mr Kamal told reporters, adding that the repayment offer was a 'fair deal'.
Mr Kamal said that Nakheel's cash would be circulated to pay Arabtec's suppliers and subcontractors in the United Arab Emirates, adding that the firm would not need to raise additional cash for its projects outside the Gulf state.
'Our investments outside the UAE don't need cash. They are self-financed, more or less.'
Arabtec last week said that it had signed on to Nakheel's debt repayment offer and urged others to follow suit. Mr Kamal also said that the 'door is still open' for future co-operation with Abu Dhabi's Aabar Investments after both firms called off their US$1.7 billion merger in April.
Analysts said that the deal, which would have seen Aabar take over Arabtec, was no longer necessary for Arabtec in the wake of Dubai's debt repayment plan.
Earlier yesterday, Mr Kamal said that Arabtec expects to have 10,000 employees in Saudi Arabia - up from 6,000 now - by the end of the year as the property company seeks to diversify its operations away from crisis-hit Dubai.
Arabtec is expanding overseas to diversify its portfolio away from Dubai's once-booming property sector, which has been hit hard by the global financial crisis as developers slow or cancel projects and jobs are slashed.
Property prices have been under pressure since the financial crisis and a slump in oil prices ended a six-year economic boom in the Gulf region.
'We are not willing to cut down on margins; we are looking at markets outside the UAE,' Mr Kamal said.
'We are moving into Angola and Turkmenistan and North Africa, where margins are healthier.'
The builder reported a 17 per cent slide in net attributable profit to 134.5 million dirhams (S$51.4 million) in the first three months of this year. -- Reuters
Source: Business Times, 25 May 2010