Friday, June 24, 2016

Global Investment House and National Bank of Umm Al Qaiwan - $250 Million Deposit

The Art of the Deal?
When last (18 October 2010 to be precise) we looked, Global Investment House and National Bank of Umm AlQaiwain were locked in an epic legal battle over a US$250 million “deposit” (if you’re GIH) or a “contractually binding pre-payment” for convertible securities (if you’re NBQ).

You’ll recall that in July 2008 NBQ and GIH had signed an MOU for GIH to purchase NBQ convertible bonds. GIH deposited the funds, but December that same year requested their return as it began to encounter debt problems of its own.  NBQ refused stating that there was a binding deal to buy the convertibles.  

The Dubai courts became involved shortly thereafter and the case was still live in early 2015 with no final ruling.    

During that period, the Supreme Court of Dubai several times reversed lower court judgements and sent the case “down” for a second look by the Appeals Court.  “Experts” from the Dubai Financial Market were asked to provide their input.  That apparently wasn’t enough.  So “experts” from the Emirates Securities and Commodities Authority were pressed into service.

AA is pleased to note that during 2015 the parties agreed an out-of-court settlement.  Of the $250 million original amount, NBQ kept $35 million plus the equivalent of another $34 million (the penal interest amount, the Dubai court had required NBQ to place in escrow with it).   The remaining $215 million was returned to GIH --more precisely to GIH’s creditors who acquired this asset along with no doubt many other “fine” ones in the debt swap.

NBQ is roughly $79 million richer.  GIH’s creditors $35 million plus lost interest/lost opportunities poorer.  GIH poorer as well but hopefully wiser.

Another chapter in structuring and legal documentation breakthroughs (or more precisely breakdowns) of convertible securities in the GCC comes to a close.     On that topic, relevant posts here: 

http://suqalmal.blogspot.jp/2009/11/one-billion-dirham-camel.html

http://suqalmal.blogspot.jp/2010/03/adia-investment-in-citigroup-time-for.html

While this saga has ended, AA’s interest has not.  Expect a post soon on Global Investment House.

Memory lane:

Earlier posts on GIH/NBQ can be found here. 

http://suqalmal.blogspot.jp/search/label/National%20Bank%20of%20Umm%20Al%20Qaiwain

If you’re interested, Note 14 in NBQ’s 2015 Annual Report provides a summary of the court saga.  

http://www.nbq.ae/annual_report/NBQ-2015-REPORT-EN.pdf 

2 comments:

Anonymous said...

I am pleased that you have returned to blogging .

Abu 'Arqala said...

Thanks for the kind comment.

Posts are likely to be less frequent than before as I have assumed a new position.