DUBAI- Dubai-based property developer Limitless told its creditors last week that it is looking to appoint legal and financial advisers to work on a financial restructuring plan, a company document seen by Reuters showed.
Limitless, along with Nakheel, was among the biggest casualties of Dubai’s property crash and subsequent debt crisis that began in 2009.
The company, formerly owned by state investment vehicle Dubai World, was one of a number of entities in Dubai that were forced to restructure their debts.
"... owing to the liquidity crisis, we are confirming that the company will be unable to pay accrued profit at the end of March 2020," Limitless said in a letter dated March 23 and sent to Mashreqbank , which works as an agent for a group of the company's creditors.
A Limitless spokeswoman said: "We have written to our creditors as a first step to finding a solution that will benefit all stakeholders."
Limitless said in the letter a team from Dubai World was advising the company's board of directors.
The letter said the company was committed to agreeing "on a restructuring plan for the benefits of the participants and other creditors."
"To this end, we are in the final stages of engaging legal as well as financial advisers to assist us."
In 2016, Limitless reached a second restructuring agreement with lenders to pay around $1.2 billion in bank debt in three instalments in December 2016, 2017 and 2018, but has only repaid part of it, sources have said.
Dubai - where property prices have been declining for most of the past decade - is bracing for a financial hit as the coronavirus crisis has impacted sectors vital to its economy, such as tourism and construction.
S&P Global Ratings said the virus outbreak had exacerbated the supply-demand imbalance in Dubai's real estate market, where the credit rating agency estimates real estate prices are "approaching levels seen at the bottom of the last cycle in 2010."
S&P said Dubai's ability to support government related entities may weaken because of the economic pressures of the coronavirus pandemic.
It downgraded real estate developer DAMAC Properties and said other developers could be downgraded soon.
($1 = 3.6728 UAE dirham)
(Reporting by Davide Barbuscia. Editing by Jane Merriman) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: firstname.lastname@example.org))