The move by SC Lowy Financial, a
distressed debt investment firm set up by Deutsche veterans Michel Lowy
and Soo Cheon Lee in 2009, is the first clear sign that distressed
players are circling Nakheel's $10.9 billion debt restructuring."We
are reaching out to all trade creditors/vendors of Nakheel with the view
of investing in their trade claims," SC Lowy said in an emailed
document to one of the trade creditors, which was obtained by Reuters."Our
firm is able to provide trade creditors with an option for an exit
rather than waiting on the outcome of the insolvency process."The firm is asking trade creditors to submit their proof of claims so that it can be reviewed for details, the document said.Nakheel,
builder of man-made palm-shaped islands, was at the centre of Dubai's
debt crisis in 2009 after a property bust in the Gulf Arab emirate. A
Nakheel spokeswoman said the firm had not been approached about the
matter.The developer, which ran a parallel restructuring process to
parent firm Dubai World, has offered trade creditors repayment of 40
percent cash and the remaining 60 percent in the form of an Islamic
bond, or sukuk. Once its restructuring is complete, Nakheel will be
owned by the Dubai government.The sukuk was expected to be issued by
the end of the first half and has already being offered at a 20 percent
discount in the secondary market by some trade creditors, signaling
their preference to cash out rather than wait for maturity.SC Lowy was formed in 2009 as a boutique investment bank to specialize in distressed and illiquid investments.Distressed
debt investors normally buy debt of troubled companies at a discount
and aim to make money by restructuring their operations and liquidating
the debt at par.Such deals are rare in the Gulf Arab region, where
intricate laws and the absence of a level-playing field has kept
international distressed debt managers away.In March, Essdar
Capital, an Abu Dhabi-backed firm, sold its bond investments in the
troubled Blue City project to an Oman government-controlled fund,
capping the completion of a rare distressed-debt deal in the Gulf.Lowy
and Lee led Deutsche Bank's Asian distressed products group until March
2009 when they broke away to start their own 14-member outfit. SC Lowy
was not immediately available for comment.
