Nakheel, which overstretched itself building
islands in the shape of palms and other ambitious projects, incurred
impairments of 73.8 billion dirhams in 2009, primarily related to the
carrying value of assets and capital work in progress. It wrote off
4.44 billion dirhams in 2008 and 301.4 million dirhams in the first
half of last year, the prospectus showed. The prospectus for the Islamic
bond was issued last month. Dubai's property boom ended in 2008,
with home prices plunging by about 60 percent, forcing many developers
to abandon projects. Some of Nakheel's ambitious projects such as
Palm Jebel Ali, another series of palm-shaped man-made island stretching
into the Gulf, are yet to be complete. Dubai has already given as much as $8.71 billion to the developer. The
company, which was previously the property arm of Dubai World, will now
be controlled by the Dubai government along with another debt ridden
property firm Limitless, that is restructuring a $1.2 billion loan of
its own. The developer is restructuring a total of $16.06 billion
in debt, including $8.71 billion of government debt which is to be
converted into equity. The remaining amount is owed to trade
creditors and banks. The company plans to issue a 4.8 billion dirham
Islamic bond to trade creditors as part of the restructuring.
