Nakheel loaned $3 bln to Dubai World in '08

Struggling property developer Nakheel loaned its parent Dubai World almost $3 billion last year before the extent of its financial problems emerged, figures show.

The company's financial statement for 2008 shows that Nakheel provided Dubai World with 11.01 billion U.A.E. dirhams ($2.99 billion) of loans described as "short-term in nature".

Nakheel, which has a $3.52 billion Islamic bond due December, declined to comment on the matter when contacted. Dubai World was immediately unable to comment.

"Loans to a related party represent amounts advanced to Dubai World, the ultimate parent company. These loans are short-term in nature, unsecured and carry an effective interest rate of 3%," Nakheel said in its report on NASDAQ Dubai's Web site.

According to the filing, Nakheel had approximately AED9.29 billion identified as "loans to a related party" still outstanding at the end of 2008.

Dubai World said in July it has almost $60 billion of liabilities on its books, which bankers say accounts for at least half of Dubai's total debt estimated to exceed $80 billion. The term liability refers to a company's legal debts or obligations arising from its business operations.

Dubai World's Nakheel unit, which is building the emirate's iconic palm-tree-shaped archipelagos, has been particularly hit hard by a near 50% slump in property values in the emirate.

It's also at the center of concerns over the emirate's ability to repay billions of dollars in debt, with its bond due in December seen as litmus test for the market. Whether the bond is refinanced or paid off, is weighing heavily on the minds of analysts rating Dubai's government-owned companies.

Earlier this week, media reports said Nakheel had repaid a AED4.4 billion securitized bond issued in January, one month ahead of schedule.

In May, Nakheel said it received funds from the $10 billion that Dubai borrowed from the Abu Dhabi-based central bank. The company declined to say how much funding it got, but analysts at the time put the figure at AED2 billion.END