Showing posts with label Laws and Legal Matters. Show all posts
Showing posts with label Laws and Legal Matters. Show all posts

Sunday 16 June 2019

Gulf Holding Kuwait - Was There a Legal Quorum at Its 2016 AGM and EGM (Held 1 March 2018)?

Definitely Not the Eminent Courts of Sharjah

The annual ordinary shareholders meeting (Annual General Meeting or AGM) of a company requires that a minimum percentage of shareholders attend in order for the AGM to be legally constituted.  The same with any Extraordinary General Meeting (EGM).  Typically the company’s Articles of Association provide that if a quorum isn’t reached at the first meeting, a lower quorum will apply to the second, and then an even lower quorum to the third.  
For no doubt good reasons Gulf Holding Kuwait didn’t hold its FY 2016 AGM or EGM until 1 March 2018.  If you’ll look at GH’s package for its FY 2017 AGM  you’ll find a copy of the minutes of both the FY 2016 AGM and EGM.  It appears that the FY 2017 AGM/EGM took place sometime after 1 March 2018.  And, as outlined below, sometime after 25 March 2018!
You may want to download a copy of this document and the 2016 AGM/EGM package as a precaution that GH might change its disclosure policies and remove both of these interesting documents from its website. 
According to the minutes, shareholders representing 517,785,847 of GH’s total 847,000,000 shares or 61.6% of total shareholding attended.   Page 6 for the AGM.  Page 9 for the EGM. 
AA does not know the quorum requirement for a second GH's AGM or EGM.  But it sure looks like we’ve got one.  
But what if one of the shareholders did not have a valid Commercial Registration?  
From the minutes we see that one of the shareholders BSB Ventures asked and succeeded in getting an item added to the AGM agenda.  If you’re interested that was to allow the Board or whoever they delegate to negotiate with related parties regarding legal cases and sign any agreements to resolve. The item was approved.  The minutes state that BSB owns some 19.81% of GH.   Point 10 Page 9.  
So who are BSB Ventures? 
A check in the Bahraini MOIC’s CR search tool www.sijilat.bh  returns a Bahraini WLL company with that name holding CR 95777-1.  This company is shown as owned by GFH.  Formerly EMAD Ventures, its name was changed to BSB 23 April 2017.  So fairly compelling evidence that this is the vehicle through which GFH holds its GH shares.  You can check details at the Bahraini MOIC website.  
One rub BSB’s CR was “deleted by law” 30 November 2017 with the CR “revived” on 25 March 2018 as you will see at the MOIC website.  
According to AA’s understanding of the Bahrain Commercial Companies Law of 2001 as amended a Bahraini company must have a valid CR to conduct business. There are penalties for conducting business without a CR.  
As noted above, BSB Ventures WLL took part in GH’s FY 2016 AGM and EGM held on 1 March 2018.  At that point it appears that BSB Ventures did not have a valid CR.  
If so, it may be that BSB Ventures lacked the capacity to attend and act at the meeting.  Or in other words it wasn’t legally present at the AGM and EGM.  That may well mean that shareholders representing only 41.8% (61.6% - 19.8%) were present.  If so, was that a quorum? 
AA doesn’t know.  AA is not a lawyer.  
Are there any Bahraini or Kuwaiti law legal experts out there who would care to comment on the following questions and provide any other insights they have? 
  1. If BSB did not have a valid Bahraini CR on 1 March 2018, did it have legal existence and capacity to act at the AGM and EGM? 
  2. If not and therefore a quorum was not reached, are the results of the AGM and EGM invalid?  This could present difficulties if the Board agreed settlements with related parties over legal cases (AGM added agenda item).  Or if the Board took action regarding the capital reorganization approved in the EGM. Presumably lack of a legal quorum would also affect other decisions taken at the meetings as well, but the first two would appear to be the most serious matters..  
  3. And finally if BSB did not have a valid CR, but voted in the AGM and EGM, would it be subject to any legal penalties in Bahrain or Kuwait? 
It may well be that GH's FY 2016 AGM/EGM had the required shareholder quorum.  
  1. The 25 March 2018 date is the date of recording the revival of BSB’s CR but that event took place prior to 1 March.  
  2. Companies without valid CRs may be permitted to undertake certain actions without violating the law.  
  3. Or GH’s Articles may allow a much lower quorum for second meetings and so if GH legally did not attend, then a quorum was still reached.

Friday 29 October 2010

Awal Bank Chapter 11 Filing - Statement on Behalf of Charles Russell

In response to my request I received the following from Alisdair Haythornthwaite at Bell Pottinger Middle East (UAE).   BPME is a division of Chime Communications, a leading UK public relations firm (among other things).

Awal Bank BSC Chapter 11 Case Update

U.S. Court Delays Consideration of Awal Bank’s Proposed Chapter 11 Protocol

Bahrain, October 27, 2010:  Charles Russell LLP, acting as External Administrator and Foreign Representative (the “Foreign Representative”) of and for Awal Bank BSC (“Awal Bank”) attended a “first day” hearing on October 26, 2010.

At the hearing, the Bankruptcy Court considered the Foreign Representative’s Motion for Entry of an Order Establishing Protocol for Chapter 11 (the “Motion”).  After hearing from both the Office of the United States Trustee and counsel for the Foreign Representative, the Bankruptcy Court directed that the Motion be further considered at a later date after giving opportunity for creditors to make representations regarding the relief requested in the Motion.

The U.S. based legal activities form part of a multinational litigation process, with court proceedings also currently underway in Bahrain, the Cayman Islands, the Kingdom of Saudi Arabia, Switzerland and the United Kingdom. It is therefore necessary that any Protocol established in the U.S. works alongside the work being undertaken in Bahrain. In this regard the Foreign Representative is considering whether to further pursue the relief requested in the Motion.

In October 2009 the Foreign Representative obtained “foreign main proceeding” recognition from the Bankruptcy Court under Chapter 15 of the U.S. Bankruptcy Code for Awal Bank’s administration proceedings in Bahrain. The Bahraini administration governed by the Central Bank of Bahrain and Financial Institutions Law (“CBBFIL”), continues to be recognised as the foreign main proceeding under Chapter 15.
I'll keep monitoring the Bankruptcy Court of the Southern District of New York for electronic filings on the case to see if there is anything on the Court's reasoning for its decision. 

Thursday 28 October 2010

Awal Bank Chapter 11 Filing

There's a report in AlQabas Thursday edition that Judge Groper denied Awal Bank's Chapter 11 petition.  At this point, there is nothing posted on the NY Southern District Bankruptcy Court website.  The last document there is the notice of 26 October for the hearing to be held today (27 October).

Friday 22 October 2010

Awal Bank FIles for Chapter 11 Bankruptcy in US

In terms of recovery all venues are likely to be highly inconvenient.

UpdateSee subsequent post.

According to news reports on Bloomberg, on 21 October Awal Bank filed for Chapter 11 bankruptcy in the Southern District Court of Manhattan listing assets of between US$50 million to US$100 million and liabilities of  more than US$1 billion. 

That would not seem to augur well for creditors.  Though it should come as no surprise. 

Earlier Awal had filed under Chapter 15 of the US Bankruptcy Code.  That Chapter is used when a company asserts its proceedings are taking place under a foreign jurisdictions laws and procedures broadly equivalent (in fairness) to US procedures.   It will be interesting to see what arguments were advanced for moving the proceedings to the USA.  Forum non conveniens?

Tuesday 19 October 2010

National Bank of Umm Al Qaiwain 3Q10 Financials - Update on Global US$250 Million Deposit Dispute


NBUQ released its 3Q10 financials earlier today.  (Yes, I'm still stubbornly using that abbreviation even though their stock symbol is NBQ  But I will alternate today between the two to partially satisfy those who have "complained".)

The major focus is as usual on the dispute over the US$250 million "deposit" (if you're Global Investment House) or the "prepayment" (if you're NBUQ).  As you'll recall the dispute turns over whether an MOU between the two parties was a binding contract obliging GIH to buy securities convertible into NBQ equity.  Yet another example of poor transaction structuring and legal documentation involving this instrument - which has been a rather costly mistake for purchasers in the past.

You can find more on this topic by using the labels "Convertible Bonds" and "National Bank of Umm Al Qaiwain".

The relevant notes in their financials are Other Assets (Note 13) and Other Liabilities (Note 17).  

As per Note 17, NBQ is holding the funds in a non interest bearing account in the amount of AED918.25 million (equal to US$250 million at the FX rate as of 30 September).  But as you'll see from Note 13, it has deposited AED1,034 million with the First Instance Court of Dubai pursuant to an order from that Court.  

The difference (just under AED 116 million) is presumably interest and perhaps legal costs for Global.   The amount represents a little over one quarter's net income for NBUQ.

The Appeals Court is scheduled to hear NBQ's appeal on 8 November 2010.   The 29 September session adjourned without taking a decision and was designed to let NBQ object to both the decision in Global's favor and the interest payment.

You'll also note that in Other Assets, NBQ is showing some AED82.7 million in "split deals".  Shades of Mashreqbank and its deals with Awal Bank and with TIBC.

Monday 18 October 2010

Saudi Capital Markets Authority Levies Fines and Penalties in Excess of SAR102 Million

On 12 October the Saudi Capital Markets Authority levied another set of record fines and penalties but not as high as its all time record of SAR278 million last January.  If you look closely, you'll see that many of those cited today were also involved in that fine.

The CMA levied SAR800,000 in fines and SAR99,434,098.10 in penalties (disgorgement of illegal gains) against seven individuals (two of whom were apparently not involved in illegal activity but received gains from that activity).  The fines and penalties concern trading in the shares of Al Baha Investment and Development Company between 23 July 2006 and 27 September 2006 as follows:

A.  Mr. Jarrallah Bin Muhammad Bin Nassir Al-Jarrallah
  1. Return of SAR28,923,826.57 in illegal trading earnings on the trading.
  2. A fine of SAR 300,000.
  3. Prohibition from purchasing traded shares for seven years.
  4. Prohibition from working in a securities firm for seven years.
  5. Prohibition from acting as a broker, portfolio manager or investment advisor for seven years.

B.  Messrs. Sa'id Bin Muhammad Bin Nassir Al-Jarrallah, Fa'iz Bin Salih Bin Abdullah Bin Mahfouz, Nabil Bin Mu'id Bin Yahya AlQahtani
  1. Sai'd to return illegal trading gains of SAR2,119,935.00
  2. Nabil to return illegal trading gains of SAR24,896,213.23
  3. Each of the three of them fined SAR100,000.
  4. Prohibition from purchasing traded shares for five years.
  5. Prohibition from working in a securities firm for five years.
  6. Prohibition from acting as a broker, portfolio manager or investment advisor for five years.
C.  Mr. Abdulrahman Bin Abdulmuhsin Bin Sulayman AlMoajil
  1. A fine of SAR200,000.
  2. Prohibition from purchasing traded shares for five years.
  3. Prohibition from working in a securities firm for five years.
  4. Prohibition from acting as a broker, portfolio manager or investment advisor for seven years.
D.  Mr. Muhammad Bin Nasser Bin Jarallah Al-Jarallah
  1. Return of illegal trading gains in his account of SAR38,293,835 caused by actions of Jarallah, Said and Fa'iz.   No fine as he apparently was not involved in the activities just a beneficiary.
E.  Mr. Nasser Bin Muhammad Bin Nasser Al-Jarallah
  1. Return of illegal trading gains in his account of SAR5,200,288.30.  Like Mr. Muhammad immediately above, a fine was not levied against him, presumably because he was not involved in the illegal activities.
I'm guessing our friends above just didn't trade two stocks back in 2006 so we may be seeing more enforcement actions from the Saudi CMA.

    Tuesday 12 October 2010

    Dubai Escrow Law: Exemptions Fueled Boom and Left Buyers High and Dry

     Credibility - Now You See It, Now You Don't

    A very good piece of investigative reporting by Asa Fitch at The National.

    In 2007 with great fanfare Dubai passed a law requiring that developers set up escrow accounts to ring fence buyers' funds so they would only be used for construction and related costs on the projects that the buyers invested in. 

    Rather quietly and quickly the Dubai Land Department gutted the law by granting exemptions to certain master developers. Among this select group were Nakheel and Emaar as well as other Dubai World entities.  The latter two have recently (three years later!) disclosed this fact.  Apparently, neither they nor the DLD considered it material information an investor/buyer might be interested in knowing or have a right to know.

    A couple of quotes:
    The developers of multiple projects in Dubai that are stalled spent money in this way, and now homeowners find that their investments were spent but that the projects cannot continue without new funding.

    But having to comply with escrow laws could be burdensome for developers such as Nakheel and Emaar because of their obligation to build expensive infrastructure in their master developments. Emaar said in its prospectus last week that if it had to comply with escrow laws, its "business model may be significantly impaired as it would only be able to finance the construction of projects with corresponding purchase price instalments once certain construction milestones are met".
    Poof, there goes the last illusion of Dubai as a world class financial center.

    And, no, it's not a matter of professionalism  as one "expert" has it.  It's much more basic.  It's a matter of running a fair, honest market.  When the games are rigged, one is well advised to go to another casino.  When one doesn't get a fair shake (or a fair Shaykh), it's time to look to another market.

    To be very clear, the central issue here is not that an exemption was given.  It was that the granting of the exemption was not disclosed.  Neither by the Government or the companies.  There may have been what were considered at the time very good reasons to give an exemption.  The problem was that buyers had no way of knowing.  They should have.  

    Friday 8 October 2010

    Special Dubai World Court Orders Nakheel to Pay CDG's Legal Costs


    According to Tom Arnold over at The National, Sir Anthony Evans, The Chairman of the Special Tribunal, ordered Nakheel to pay CDG's legal costs.

    At this point the Court has not rendered a judgment on CDG's claim.

    Thursday 7 October 2010

    The Investment Dar - Rumor of Restructuring Bombshell: Request for 50% Hiarcut

    Major Al-Musallam Rides to Glory

    Before we go further to be very clear this is an account which neither the Company, the Central Bank or the creditors have confirmed.
    Update:  TID has denied this story.

    Al Qabas reports that TID has submitted a completely new restructuring plan to the Central Bank of Kuwait which calls for lenders to forgive 50% of the existing debt, i.e. KD500 million.   According to the report, lenders were not consulted or advised prior to TID sending the proposal to the CBK.

    What's going on here is anyone's guess.

    Mine is that the Company and the lenders are jockeying from (what I think is) the fallout from the Ernst and Young report.  As you'll see below. TID and its lenders appear to have been discussing alternatives /modifications to the original plan. From the Al Qabas account these seem predicated on the fact that the Company cannot repay all the debt.  The unpayable quantum seems around a 50% or so.

    I suspect that Ernst and Young came back with a very negative assessment of  TID's ability to repay in full and, thus, case serious doubt on the Company's ability to continue as a going concern.  As you're aware, the Financial Stability Law is designed to give protection to viable companies.  It is not intended as a mechanism to provide legal cover for disguised liquidations.  If I'm right (and as Umm Arqala will tell you that's a rare occurrence), a report like this would have thrown quite a large "wrench" into things, complicating the CBK's acceptance of the already agreed restructuring.  How could the Central Bank recommend to the Court that the Company be allowed under the FSL under such circumstances?

    I'm also guessing this occurred prior to the end of the first four month period the CBK had for evaluation of the suitability of the original plan and of TID to enter finally under the FSL.

    What leads credence to both assumptions are reports in the article that the lenders have floated some  proposals or modifications of their own and the timing of those negotiations.  One was the conversion of  roughly half the debt to equity with some preservation of the rights of the existing shareholders.  Presumably, the lenders could quite easily make the argument that if a debt conversion were required, the old equity has been lost .  And thus the old equity holders should be wiped out.  Their proposal is reported as more generous, though it's not clear what percentage they would allow the old shareholders in the post conversion equity.  Leaving 10% or 20% might for example be considered highly generous by the lenders and an "outrage" by the existing shareholders.  Negotiations on this proposal supposedly took place between July and September.  The story goes that TID's Board went back on a tentative agreement because some of the existing major shareholders did not want their equity interests diluted.  (Unclear to me how you dilute something worth nothing.  There's also a hint here that the major shareholders are very important people.   And, if you know Al Q's politics, you might suspect they are pointing the finger at regal personages).

    As a second alternative, the lenders suggested taking some assets in exchange for the debt.  The article says  that E&Y determined that this proposal was acceptable under international principles.  Dar supposedly made a counter offer that brought things back to zero. 

    At this point, the two sides are in a deadlock.  I think that TID's proposal (assuming the report is accurate) is more a negotiating tactic than a viable proposal.  Rather it is an attempt to break the logjam by setting forth a maximum position.  One they probably know both the lenders and the Central Bank would have a hard time accepting.  What this proposal does, though,  is shift the parameters of the debate.  While lenders may reject a 50% discount, it may be harder to avoid some meaningful haircut - particularly, if the choice is bankruptcy.  And in order to get itself out of having to make a decision that may prove wrong or hurt its and the country's reputation, the CBK may be inclined to lean on the parties to compromise.  TID has just set one bound on the compromise.

    It could be that they are trying to play for time - hoping for a miracle.  Realistically playing for time  hurts all parties - TID, the lenders, Islamic Banking, and Kuwait.  But maybe that's the goal - to maintain the status quo.

    The article describes the choices in front of the Central Bank as:
    1. Issue a conditional acceptance of the proposal subject to conformity with accounting principles and the agreement of the lenders.  (Or in other words neatly pass the buck.  Or is that the dinar? As Al Q elegantly puts it, getting the lenders to agree may be very difficult given the Company's breach/violation of the existing agreement.  That raises AA's first law of underwriting and due diligence "know your customer".)
    2. Reject the proposal.  In which case it's expected that TID will sue the CBK in an attempt to confuse the issue and buy more time.  As Al Qabas elegantly puts it الى ما لا نهاية . (Probably not a first choice. More likely is forcing the Company and its creditors back to the negotiating table.  Or putting them in a situation where they will decide the fate of TID, if that fate is to be bankruptcy).
    3. Push the lenders to bankrupt the Company - which will lead to all sorts of negatives for all parties and harm the financial sector, Islamic Banking and the reputation of Kuwait. (I'm guessing not an alternative high on the CBK's list).
    4. Convert TID to a holding company.  This would remove it from Central Bank supervision so that the lenders can apply the restructuring deal agreed.  Also the CBK's June ratios would not apply.  (This seems to me to be a bit of red herring.  The CBK can grant an exemption to TID as a finance company from the regulationsSupposedly the lenders will reject this because they don't think the administration of the company is really interested in solving the problem.  The lenders have on more than one occasion made it quite clear what they think about management's ethics.  They began by asking the CBK to place a minder in the Company.  Then they pushed for the appointment of a Chief Restructuring Officer).
    5. Force TID back to the negotiating table with the lenders to find a solution and return to the original plan.  (This seems contradictory.  The original plan is probably moot at this point.  I think the lenders are going to have to accept some changes - and these will be against their interests.  From the report of the alternatives they've offered already it seems pretty clear that they've accepted this - even if it was no doubt reluctantly.  The CBK may well force the parties back to the negotiating table but there will be a new deal.  Perhaps the CBK could impose a time limit for reaching an agreement using as the deadline some date prior to the date it's required to give a recommendation to the FSL Court).
    6. Give TID an exemption from the new ratios saying the old plan was devised based on Central Bank advice to the lenders and thus it's not fair to change the rules on them.  As per the article, TID has apparently been saying that the original restructuring plan doesn't conform with the CBK's  "new rules".  The implication being the plan must be modified.   (I don't think that the CBK new rules are the real issue here.  The sticking point is TID's ability to pay and to continue as a going concern.  If the new rules were the only point, then I think the CBK would have given the exemption.  This could be quite easily fudged as an agreed plan to implement the new rules. And so it could be presented not so much as an exemption but a granting of additional time to achieve the goal.  When the debt is paid in full, TID will clearly be in compliance).
    7. Exit TID from the FSL and leave it to its fate.  (The CBK probably doesn't want to be the one who puts down this dog.  Better to have the lenders do so.  The "trick" is to find a way to put the parties in a situation where they either come up with a solution or fail - a way which keeps the CBK's hands pristine.  The time limit for the CBK to give its recommendation to the FSL Court is a neat escape hatch.  If the parties haven't agreed by then, the CBK can tell the Court it cannot make a recommendation.  The Court should then refuse to allow TID final entry into the FSL.  Since this is the last extension allowed, the matter is out of the CBK's hands.  Nature and the courts then take their course.  That should be quite a frightening thought for the lenders .  As they stare into the abyss  of almost a complete loss, all sorts of discounts and compromises may become possible).
    Finally to close out this post, a recap from the Creditors' Committee official letter to the Central Bank rejecting TID's new plan "in whole and in detail":
    1. TID's proposal makes a gift of the money of others (the lenders) to the Company and strengthens (supports) the rights of equity at the expense of the lenders who have not received a single fils since the beginning of the crisis but only promises.  (But they were some really nice promises. Perhaps, even said with one's hand on the Qur'an).
    2. TID's proposal is contrary to international and global practices (customary usage) and puts the lenders in the situation of a fait accompli with the proposal being put forward without their agreement or consultation.
    3. TID's management is "hitting" (harming) the interests of the creditors and shareholders.  Therefore the lenders reject the idea of a discount which is unjust.
    4. The Committee considers that TID's proposal ignores the repayment schedule already agreed.  10% in Year 1, 20% Year 2, 20% Year 3, 30% Year 4 and 20% Year 5.  (There seems to be an argument of a breach of faith here.  And, yes, while the lenders may be thinking of a breach of the agreed business contract for the rescheduling, AA also is thinking that in this context the term applies as well to  religion).
    5. TID's proposal prefers (in the sense of giving priority) the shareholders over the lenders contrary to what was agreed previously.
    6. The Company has wasted the shareholders' money hiring financial and legal advisors and wasted the banks time negotiating the past 18 months.  
    This has been a bad situation from Day #1.  The passage of time has not made things better.  It's likely to get worse.

    The lenders face a real dilemma.  Do they compromise to try and get back as much as they can?  Or at some point do they just bring down the house of cards?  With 18 months of time on their hands, lenders may have built rather hefty provisions against this name.  That may give them a bit more negotiating room.

    The Central Bank is in the most uncomfortable of positions.  It's got to be hoping that third parties or events are dispositive and that it doesn't have to make a difficult decision.

      Sunday 26 September 2010

      Central Bank of Kuwait Denies Noor and Gulf Investment House Extension on Treasury Share Purchase


      I don't remember seeing this sort of refusal before. But I may have missed it.

      In any case today, the Central Bank of Kuwait announced that it had refused to extend its earlier approval to both GIH and Noor to purchase or sell up to 10% of their own stock.   Announcements below.

      Also anyone out there who can help with tafsir on the legal references please do.  I don't understand the reference to the Commercial Companies Law.  Article 115 has to do with the issuance of "redeemed shares".  Could this be a reference to Article 114?  Nor am I familiar with Ministerial Order (sometimes Ministerial Resolution) #10 of 1987 nor that of #11 of 1988 which amended it, nor #273 of 1999. 

      In any case, it would seem a prudent regulatory move to restrain investment companies from buying treasury shares until their financial conditions had shown robust improvement.  Certainly, at this time companies have better uses for their limited liquidity than punting in their own shares.  You'll note in both cases the two firms asked permission to buy their own shares.

      GIH
      [9:13:26]  ِ.عدم موافقة المركزي لبيت الاستثمار الخليجي بشراء مالايتجاوز 10% من اسهمها
      يعلن سوق الكويت للاوراق المالية بأن بنك الكويت المركزي افاد بعدم الموافقة
      على طلب تجديد سريان الموافقة لشركة بيت الاستثمار الخليجي (الخليجي) بشراء ‏
      ما لا يتجاوز 10% من اسهمها المصدرة ويمكن للشركة فقط القيام بالبيع من رصيد
      الاسهم المشتراة المتوافرة لديها وذلك لمدة ستة اشهر تنتهي في 17-3-2011.‏
      حيث ان ذلك الامر يتطلب ضرورة الالتزام بما وضعه البنك المركزي من ضوابط
      وشروط في شأن تملك الشركة المساهمة لاسهمها اضافة الى ضرورة الالتزام ‏
      بأحكام المادة 115 مكرر من قانون الشركات التجارية واحكام القرار الوزاري
      رقم 10 لسنة 1987 وتعديلاته بموجب القرارين الوزاريين رقم 11 لسنة 1988‏
      ورقم 273 لسنة 1999.‏
      Noor
      [8:50:52]  ِ.عدم موافقة المركزي لنور للاستثمار (نور) بشراء مالايتجاوز 10% من اسهمها
      يعلن سوق الكويت للاوراق المالية بأن بنك الكويت المركزي افاد بعدم الموافقة
      على طلب تجديد سريان الموافقة لشركة نور للاستثمار (نور) بشراء ما لا
      يتجاوز 10% من اسهمها المصدرة ويمكن للشركة فقط القيام بالبيع من رصيد
      الاسهم المشتراة المتوافرة لديها وذلك لمدة ستة اشهر تنتهي في 28-3-2011.‏
      حيث ان ذلك الامر يتطلب ضرورة الالتزام بما وضعه البنك المركزي من ضوابط
      وشروط في شأن تملك الشركة المساهمة لاسهمها اضافة الى ضرورة الالتزام ‏
      بأحكام المادة 115 مكرر من قانون الشركات التجارية واحكام القرار الوزاري
      رقم 10 لسنة 1987 وتعديلاته بموجب القرارين الوزاريين رقم 11 لسنة 1988‏
      ورقم 273 لسنة 1999.‏
       

      Wednesday 22 September 2010

      Nakheel: CDG Lawsuit Will Not Delay Deal with Trade Creditors

      Nakheel has issued a press release (to Reuters) stating that CDG's lawsuit will not delay its reaching a settlement with trade creditors.  It also said that it expected to prevail against CDG noting that it disputed the entire claim and had counterclaims of its own against CDG.
      Nakheel said it has approximately 85 percent of acceptances, by value, for its restructuring deal and is "well on target to achieve its 95 percent acceptance of all payables and claims within the near future," according to the statement sent to Reuters late Tuesday

      Mashreqbank v AlGosaibi - Al Sanea's Forum Non Conveniens Motion Successful

      Above Main Entrance to NY Supreme Court

      Looks like Mr. Al Sanea is continuing his run of victories in the NY Courts.  

      As you'll recall when Mashreqbank filed suit against AHAB in the NY Supreme Court, AHAB had Mr. Al Sanea added as a third party defendant.

      July 29 Judge Lowe of the NY Supreme Court ruled in favor of Mr. Al Sanea's request that due to forum non conveniens he and Awal Bank be removed as third party defendants. 

      While Mashreqbank is appealing, based on the pattern of judgments in the NY Supreme Court, their chances of obtaining a reversal of the ruling would appear to be somewhere between slim and none.   Wonder if AHAB will now find NY an inconvenient forum and file a motion.  There seems to be lots of precedents for this.

      (As before, the email notification from the NY Supreme Court is a bit late in arriving.)

      You can find earlier posts on this topic by using the label "Mashreqbank".

      The NY Supreme Court Case Reference # is 601650/2009.

      Al Ahli Bank of Kuwait v AlSanea & Saad Trading - NY Case Dismissed Forum Non Conveniens

      A Rather Inconvenient Place After All

      Judge Richard Love III of the Supreme Court of the State of New York decided last July that New York was indeed a forum non conveniens and so dismissed ABK's suit against Mr. Al Sanea and Saad Trading, Contracting and Financial Services Company.

      (In case you're wondering why the delayed posting, while the judgment was electronically filed 11 August, I didn't get an email until today).

      I suspect the new venue will turn out to be much much more convenient for Mr. Al Sanea.  Under AA's law of the conversation of legal energy, that may make it much much less convenient for ABK.  Such is life.

      You can find the judgment as Document #28 at the NY Supreme Court's website under Case # 602487/2009.

      If you use the tag "Al Ahli Bank of Kuwait" you will find earlier posts on this topic.

      The Investment Dar - Dubai Creditor Meeting


      TID held a creditors' meeting in Dubai 21 September.  Both Al Watan and Al Qabas have accounts.

      The Al Watan (Taamir Hamaad) article is fairly bland - no fireworks.  Adnan Al Musallam  is quoted as reiterating TID's firm desire to repay its debts, adding that the reality of the financial crisis made it incumbent  on everyone the obligation to work together to reach the restructuring.   

      He also proposed the formation of a holding company capitalized at between KD300 million to KD400 million - to be administered by the banks and investors - as the vehicle to settle TID's debts.  The rationale appears to be to ensure compliance with the Central Bank of Kuwait's new rules on investment companies.  Apparently to shift the debts off TID's balance sheet along with the assets - thus  improving TID's performance under the CBK's  three ratio tests.  He said that he had requested the executive and legal management of the Company to study this matter.

      On the other hand Al Qabas (Mohammad Sha'baan) has a more fiery story (not unexpected) of creditor "anger".  In the Al Qabas version, some creditors are on the verge of a confrontation with TID and its Board over the following:
      1. A belief that parties outside the formal management/Board structure of TID are really making the decisions
      2. That the Company is deliberately stalling progress
      3. That the creditors have been overly patient during the past two years but have gotten nothing from the Company
      4. Board Members are deliberately missing meetings with creditors and provoking confrontations in order to evade responding to creditor requests.  A central point is the creditors' demand that they be kept fully in the picture as to what is going on at TID, including efforts to comply with the Central Bank's new regulations for investment companies
      5. That some creditors are prepared to bring legal action against all parties - including against the Creditors' Coordinating Committee,  if there is an attempt to impose the restructuring plan without 100% creditor acceptance or acceptance by an absolute majority of creditors.   AA:  This is a puzzling statement.  It's pretty clear by now that all creditors are not going to accept the plan.  And equally that the whole point of recourse to the FSL is to cram down dissident creditors.  Al Qabas' informed sources may be less informed than they claim.
      6. That TID has apparently stopped its program of salary reduction for senior management and that the salary scale has reverted to what it was in the boom years.  AA:  This is similar to the earlier theme about creditor anger over a raise and bonus for a member of senior management.  A neat way of attempting to finesse this is to eliminate a reduction and say that technically the fellow is not getting a raise but rather his salary is being restored to what it was prior to the reduction.  Unclear if this is what is going on. 
      7. That some Board Members through related companies they control, companies which are partners with TID in certain assets, are gaming the realization of assets.  AA:  This is the fundamental creditor fear - that asset disposals will be gamed to reduce the banks' realization proceeds.  Not an unreasonable fear in the land of egregious related party transactions.
      Two quite different accounts, though it should be noted that Al Qabas is speaking about creditor discontent which might manifest itself in the future not battles raging at present.

      There's a creditors meeting today in Kuwait for those creditors who missed Dubai.  Hopefully, more detail will be forthcoming.

      It's no surprise that creditors' patience is wearing thin.  It's been over two years.  The Central Bank is still reviewing whether to allow TID to use the FSL as cover for its rescheduling.  TID has yet to release any 2009 financials - either quarterly or fiscal year 2009.

      Monday 20 September 2010

      Construction Delivery Group Files AED49 Million Suit Against Nakheel

      Bradley Hope over at The National reports that CDG has filed an AED million suit against Nakheel at the special Dubai World Tribunal at the DIFC.

      Here's an extract from the claim filed by CDG (Dubai World Special Tribunal Case DWT-0008-2010).

      The DWT website is at www.dubaiworldtribunal.ae.

      1.The Claimant claims against the First Defendant and/or the Second Defendant and/or the Third Defendant  damages, monies due, interest, legal fees, costs and expenses.

      2.The Claimant's contractual and non-contractual claims arise out of and in connection with a contract (PJ-338) and/or contracts for the provision of Facilities Management Services (comprising Mobilisation Phase Services and Operational Phase Services in respect of 1,224 villas and 114 “Canal Cove homes” located on the Palm Jumeirah, Dubai) between approximately March 2007 and January 2009.

      3.The Claimant Claims:

      (i)  AED 24,514,464.49  Mobilisation Phase: unpaid fees to 31 January 2009
      (ii) AED 2,608,347.75  Mobilisation Phase: loss of profit 01 February 2009 – 30 June 2010 
      (iii) AED 6,001,899.58  Operational Phase: unpaid fees to 31 December 2008
      (iv) AED 1,369,200.00 Operational Phase: loss of profit 01 January 2009 – 31May 2009
      (v) AED 4,097,925.00 Operational Phase: Maintenance Services; fixed running costs for villas exceeding 400;  01 June 2008 - 31 December 2008
      (vi) AED 982,534.00 Loss and damage: office, plant and equipment
      (vii) AED 103,235.69 Loss and damage: emergency stores
      (viii) AED 1,095,149.87 Loss of main office overhead contribution
      (ix) AED 679,023.69 De-mobilisation costs on wrongful termination
      (x) AED - To be advised  Loss of the use of the Claimant's Performance Security (AED 1,569,460.00) for the period 10 February 2009 – 07 October 2009

      Interest pursuant to Articles 88 and 76 of Federal Law No. 18 of 1993: the Claimant claims compound interest on the above amounts at 12% per annum from the date such sums accrued to the date of payment, alternatively at such rate and for such period as the Tribunal deems fit.
      As Bradley notes the process and outcome of the case will be closely watched to see how the Special Tribunal works.  As well, whether the ST gives smaller creditors a way around the rescheduling.  It would seem that CDG perhaps does not intend to contract with Nakheel again.

      Sunday 5 September 2010

      Public Prosecutor Stays Gulf Bank Case Against Derivatives Client

      Citing parties close to the case, Al Qabas reports (or at least I think so) that the Public Prosecutor has stayed Gulf Bank's case against its client responsible for the derivatives debacle in 2008 (when GB lost some KD359.5 mm leading to the surgical removal of its board and elements of senior management along with the KIA taking a significant stake to top up the needed capital restoration).

      I say I think so because I'm not quite sure that my translation of " النيابة العامة حفظت القضية المرفوعة من قبل بنك الخليج "  is correct.  Sadly, AA didn't graduate from KU's Faculty of Law.

      Anyone out there who can confirm or correct my translation, please post.

      Thursday 2 September 2010

      TAQA Responds: No Merit to Peter Barker Homek Lawsuit

      TAQA issued a press release on the Abu Dhabi Exchange this morning:
      1. No merit to Mr. Barker-Homek's lawsuit.
      2. The Company will respond through legal channels at the appropriate time.
      3. No impact on financial statements expected.
      Earlier post here.

      Tuesday 31 August 2010

      The Price of Honor: Opening Bid US$430 Million


      The National carries the story of Mr. Peter Barker-Homek, once CEO of Taqa, now dismissed and in court in Michigan to assuage the insult to his honor with a US$460 million lawsuit in the State of Michigan. Of which US$430 million is for pain, suffering, reputational damage, etc.

       In case you're wondering his claim is for approximately 21% of the Company's net worth at 30 June 2010 (excluding minority interests and shareholder/government loans).   Or 2.11 x the net income for the first six months of 2010.

      The Investment Dar and Commercial Bank of Kuwait - Settlement of Boubyan Bank Shares

      Quoting informed banking sources, AlQabas reports that Commercial Bank of Kuwait has proposed to TID that the BB shares be sold and that any amount remaining after the settlement of TID's obligations to  CBK will then be remitted to TID.

      In effect then, CBK is proposing to treat the transaction as a secured loan rather than a failed repurchase agreement.  Under the latter, CBK would be entitled to absolute ownership of the shares with no payment at all to TID.

      Clearly, CBK doesn't want to enter into the rescheduling as one of the creditors and share the BB shares (very good collateral) with the entire set of creditors in return for "security" in the pool of what Adnan Al Musallam has more than once described as "strong" assets (which are probably less "strong" and certainly less liquid than Boubyan's shares). 

      There is a reason why some creditors lend on a secured basis as opposed to an unsecured one.   They get to pick the collateral that gives them the credit comfort they need to extend the loan.  And know that if the borrower doesn't pay, they have a second way out that doesn't involve a rescheduling.

      The proposal seems an eminently reasonable solution.  

      As the parties have haggled over this problem, they lost a chance to conclude a quick sale with a willing buyer with deep pockets (National Bank of Kuwait).   Perhaps, the Central Bank can be persuaded to allow NBK to buy another 19.196%.  The share price is an attractive KD0.560.

      Monday 30 August 2010

      Aayan Leasing and Investment - 1Q10 Loss of KD7.8 Million


      ALI announced its 1Q10 earnings today on the KSE.  As usual only Arabic text  (below) is available. The Central Bank of Kuwait approved release of the financials on 16 August.  There was no explanation for the delay.  Based on "history", I'm guessing that as with the Company's 2009 financials, the delay has been occasioned by the KSE's more than usual scrutiny.

      The headline number is a loss of KD7.8 million for the first quarter compared to a loss of KD12.5 for the period the year earlier.  Shareholders' equity is KD23.6 million versus KD89.1 million at 1Q09.  Equity was KD31.2 million at 31 December 2009. 

      As you might expect, the auditors have raised a matter of emphasis about the Company's ability to continue as a going concern.  Current Liabilities (KD410 million) exceed Current Assets (KD166 million).  Accumulated losses are KD75 million.  

      That last comment has got me scratching my head.  On 10 August ALI held its OGM/EGM in which shareholders agreed to use Reserves of KD37.8 million plus reduce the paid in capital to KD29.6 million (from KD63.9 million) to offset accumulated losses.  They also agreed to a KD10 million capital increase by way of a rights offer at par (KD0.100 per share).  So is it that the legal steps to accomplish this have yet to be finalized?  If so, isn't this fact worth noting?  That is, that the Company is taking steps to rectify the situation. Otherwise readers might infer there is an ongoing unaddressed  violation of Article 171 of the Commercial Companies Law.

      The auditors also mention ALI's default on some KD100 million of debt.  In the August 10 OGM/EGM Ali "T" AlGhanem, the Company's Chairman, predicted the signing of a rescheduling agreement within two to three weeks.   KFH is the lead bank on the rescheduling negotiations.

      A difficult situation. 


      [13:38:23]  بلغت (خسارة) (أعيان) (7.7) مليون د.ك لل3 أشهر المنتهية في 31-03-2010‏
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