Nakheel board replaced, HSBC supports Dubai plan

Dubai swept out the board of the property firm at the heart of its debt problems and removed its high-profile chairman on Tuesday, installing largely unknown names unconnected to the emirate's rapid-fire growth period.

The shuffle at Nakheel comes in the wake of parent company Dubai World's $9.5bn rescue plan last week, aimed at restructuring $26bn debt linked to the conglomerate and its property units. The new board of Nakheel, builder of man-made islands in the shape of palms and a map of the world, will get a new board and chairman as the developer pushes ahead with projects.

Ali Rashid Ahmed Lootah was appointed chairman, replacing Sultan Ahmed bin Sulayem who is also chairman of Dubai World and a major name in Dubai's corporate landscape.

Lootah, who comes from a well-known merchant family, is listed as a vice-chairman of Dubai's Mashreq Bank on the lender's website.

"These changes are a sign of the times," said Khuram Maqsood, managing director of Emirates Capital. "Conservative merchant families who built their fortunes on a diet of "slow and steady" are replacing the bold and ambitious guard."

Bin Sulayem, who remains chairman of Dubai World, said in a statement he welcomed the new Nakheel board "which will work on the operational level."

The Dubai government said in a statement the new board would help prioritise property projects, many of which have been put on hold since Dubai's boom turned to bust.

"They have done the financial restructuring and now it's time for the administrative restructuring, so it's a natural progression," said Mohammed Yasin, chief executive at Shuaa Securities. "Without changes to management, the restructuring would have been half done.

"The challenges are still big for Nakheel but putting new money after bad money does not ensure success. It's the management that ensures success."

Dubai plans to pour $8bn into Nakheel if creditors agree its plan to give lenders their money back in five to eight years, and to repay two key bonds.

HSBC, one of the largest creditors to Dubai World, put its weight behind the restructuring plan on Tuesday, saying it expected positive results soon.

"We are very, very close to having a complete satisfactory outcome. There are no hiccups or roadblocks to the deal," Stuart Gulliver, HSBC chairman for Europe and the Middle East, told reporters in Abu Dhabi.

Nakheel claims to be the largest property firm in the Middle East and was the unit within Dubai's dense constellation of government-related entities that threatened to scupper over six years of rapid expansion that thrust Dubai on the world stage.

Dubai's debt woes, which reached the public spotlight in November and triggered a global market rout, have seen key lieutenants and business allies of the emirate's ruler removed from positions of power and, in one case, jailed.

Days before its shock November 25 debt delay announcement, several key Dubai players were abruptly downgraded, including Omar bin Sulaiman, the head of Dubai's financial district and a member of Dubai's supreme fiscal committee.

"I think a lot of the (new Nakheel) appointments are based on trust and whether they have demonstrated in the past that they haven't taken any excessive risks," Robert McKinnon, ASA Capital chief investment officer. "They have to be trusted by key people in Dubai."

Last week, Bin Sulaiman, the former governor of Dubai International Financial Centre (DIFC), was detained in connectin with alleged financial irregularities involving $13.6m in bonuses.