Speculation rises over Dubai developer Limitless land sale

Dubai

FOR all the progress made in tackling Dubai's debt, some issues refuse to go away.

Creditors to Limitless LLC are trying to arrange a meeting amid speculation that the Dubai-based developer sold land in Saudi Arabia, five people familiar with the matter said. Limitless is trying to restructure a US$1.2 billion Islamic loan for the second time, and creditors said that proceeds from any sale should go towards settling the debt under the existing restructuring deal, according to three of the sources, who asked not to be identified because the matter is not public.

Dubai government-related entities have spent years since the financial crisis renegotiating with creditors to delay payments and reorganise loans. Shares in Amlak Finance PJSC, an Islamic mortgage provider, will resume trading next week after a suspension of more than six years while it restructured US$2.7 billion debt. Any major asset sale by Limitless could complicate talks with lenders, according to Commerzbank AG.

"If this sale has in fact occurred, then it will raise demands from creditors as they would expect part of the proceeds should first be allocated towards an early repayment," said Apostolos Bantis, a Dubai-based credit analyst at Commerzbank. "There's a probability that such a sale may also be a breach of the restructuring agreement if in fact it has occurred without the consent of the creditors."

Limitless may have sold land in the Al Wasl project in Riyadh, said the sources. Lenders have asked the company for clarity on the possible deal and have yet to receive a response, two of the sources said.

"If there are any developments, our stakeholders will be the first to know," said Limitless spokeswoman Rebecca Rees on Monday, declining to comment further.

The company began talks with lenders to restructure its debt for a second time last year. It got approval from about 85 per cent of its creditors for a three-month extension to a loan payment due on Dec 31, chairman Ali Rashed Lootah said in January.

Limitless proposed selling land near Dubai's main port to help repay the US$1.2 billion loan, three people familiar with the proposal said in December. The developer offered to pay lenders in three instalments in 2016, 2017 and 2018 instead of the three years till 2016, they said. Rental income from a commercial property near the port in Dubai's Jebel Ali area will also support payments, they said.

The developer planned to build a US$12 billion, 1,400 ha mixed-use community project on the land 17 km north-west of Riyadh, according to a 2009 statement on its website. The development was due to be constructed in five phases and have 55,000 homes once completed. BLOOMBERG