Dubai World property wing nears repayment deal

Arrears payments from Nakheel to large contractors, likely to include British suppliers in engineering and project management, would be its first step towards restarting its stalled projects in the emirate.

Nakheel, known for building palm-shaped islands, said last month that about half of its creditors had agreed to the deal. Once 65% accept the terms they will begin receiving cash payments.

Trade creditors owed more than 500,000 dirhams have been offered full repayment, with 40% in cash and the rest with an Islamic bond, or sukuk, which has a 10% annual return.

"Many of the creditors are coming to the conclusion that this is the only deal on the table so it's better to get something rather than nothing," said Ashley Painter, partner at law firm Clyde & Co, who represents some creditors.

A Nakheel spokeswoman said talks were continuing with larger creditors, but more have agreed to the proposal since the announcement was made last month.

"We're very happy with all the progress that's been made and hopefully this will be wrapped up quite soon," she said.

She said the payments were intended to help revive construction projects that were stalled by Nakheel's finance crisis, but did not say which would be resumed first. "Our intention is to carry on all the near-term projects," she said.

Nakheel has begun to repay small trade creditors owed 500,000 dirhams or less.

Nakheel's proposal is part of Dubai's $9.5 billion rescue plan for Nakheel's parent, state-owned Dubai World. The conglomerate is in talks with lenders to restructure $26 billion in debt.