Landmark Nakheel restructuring features sukuk first

Author: Gemma Varriale | Published: 7 Sep 2011

One of the Middle East’s most complex restructurings has completed through the unique use of a sukuk. Lawyers in the region predict the technique will now be used frequently in UAE restructurings.

The landmark restructuring of Nakheel, which had liabilities totalling more than £10 billion ($16 billion), was finalised on August 25 through the sukuk issuance .

This is the first time the instrument has been used to settle outstanding trade creditor claims in the Middle East. It is also the first sukuk to allow for a tap issue to be fungible with a pre-existing issued series.

The new liability on Nakheel’s balance sheet means the company’s former-trade creditors are now sukuk-holders. This, said Debashis Dey, head of Clifford...