Nakheel payouts \'this week\'

Nakheel will begin a five-year restructuring plan today that includes the issuance of a Dh4.8 billion (US$1.3bn) Islamic bond to contractors, the Dubai property giant\'s chairman confirmed yesterday.Ali Rashid Lootah was quoted as saying on the Dubai Media Office\'s official Twitter feed that Nakheel was going ahead with the plan and would issue the Islamic bond, or sukuk, this week. The sukuk shares would be released all at once, but full distribution to hundreds of Nakheel contractors could take between two and three months, he said. Deutsche Bank is acting as the lead arranger. The Islamic bond, or sukuk, is a central part of Nakheel\'s bid to settle unpaid dues to contractors after its business ran aground during Dubai\'s property slump.Under a recapitalisation plan announced last March, all contractors with claims against the company were to get Dh500,000 cash payouts. Those owed more than that were to get 40 per cent of the remainder in cash and 60 per cent in the form of sukuk shares returning 8 per cent a year. Nakheel was expected to reveal further details at a press conference today. A company spokeswoman told The National last week the sukuk would be issued \"as soon as is practical\". The company was working through an administrative process that involved \"numerous parties with numerous tasks\", she said. Many developers are expected to sell their sukuk shares to investors once they receive them, but they currently face a tough market. Prices for bonds issued by Dubai Government-owned companies have sagged recently, although they remain well above their levels when Dubai World announced its debt repayment standstill in late 2009. A sukuk issued by Emaar Properties, which is a third-owned by the Government, has fallen by about 3.3 per cent in price since August 4, sending yields upwards. For contractors who want to hold on to their sukuk shares, banks are offering discounts and fee waivers.HSBC said in April it would waive custody fees for six months, and Standard Chartered said the following month it had a strong response to an offer of lower fees and help setting up accounts.National Bank of Abu Dhabi, among other banks, is also offering special custody rates for the sukuk.Nakheel\'s reorganisation comes in concert with a broader restructuring at its parent company, Dubai World. The government-owned conglomerate sealed a $24.9bn debt restructuring this year, and Nakheel is expected to be carved out of the company and exist independently once the shake-up is over. Nakheel is also restructuring about $13bn of bank debt. Nakheel\'s sukuk has suffered numerous delays. Officials initially said it would be issued at the end of last year or early this year. Nakheel pushed it back to the second quarter and then to this month, citing administrative issues. From / The National