Sunday, 25 October 2020

The Even More Curious Case of Bahrain Middle East Bank - Who Owns the Bank?

Another curiosity regarding BMB.

According to the information at the Bahrain Bourse, BMB has two major shareholders:
  1. AN Investment WLL Bahrain (ANI) holding some 80.77%
  2. Al Fawares Construction and Development Kuwait (ALF) holding some 14.48%
According to the online commercial register of Bahrain’s Ministry of Commerce, Industry and Tourism (, BMB is owned 100% by a “group of shareholders” who are all Bahraini.

You can look this up at Sijilat using BMB’s CR 12266-1.

Even more curious, according to Sijilat, ANI (CR 86835-1) was struck from the Commercial Register with the notation “deleted by law” on 15 September 2019. That is, by AA’s reckoning over one year ago.  

So here is the conundrum. 
  1. Assuming that the MOICT information is correct and that ALF has not acquired “Bahraini corporate citizenship” which Bahraini entity or Bahraini individuals own the shares previously owned by ALF?
  2. Assuming that the Bahrain Bourse information is correct, how can AN Investments WLL be a shareholder in BMB, if it no longer has a valid commercial registry? If ANI is no longer the shareholder, then who or which Bahraini entity holds the 80.77% of BMB’s shares previously owned by it?
  3. Given that over one year has passed since ANI’s forced de-registration, it would seem there would be sufficient time for the MOICT and Bahrain Bourse to agree and “conform” their data.
  4. Beyond that, surely BMB itself has an obligation to advise the Central Bank of Bahrain and the Bahrain Bourse of changes in its shareholding.
Is this a failure of communication? 

Or something else?  For example, a change in ownership due to a legal proceeding?

Tuesday, 20 October 2020

Dana Gas - Mashreq Bank Rides to the Rescue Sukuk to be Repaid


An Essay on Criticism Seems a Valid Citation

Dana Gas announced on 15 October that it had secured a USD 90 million loan from the UAE's Mashreq Bank priced at Libor plus 3 percent. 

The loan matures in one year, but is extendable at DG's option for another four years.

As per the press release, the loan "will be repaid" when DG's Egyptian assets are sold.

Some thoughts.

First, the 3% margin is described as "initial".  That certainly sounds like it is subject to change.  AA for one would expect that as the loan is extended the margin is increased. 

Second, DG's Chairman asserted that this loan is a testament to DG's "financial and operational strength".  

That is a bit of a howler.

It reminds me of the repeated assertions of Damas' "proven business model" made some years back by the Abdullah Brothers.

DG is borrowing one year money at a 3% margin.

That is a rather large spread.

And more likely evidence of financial and operational weakness than strength.

In any case the long ordeal of the Sukuk holders is over.

Perhaps one man's gain will be another man's loss?


Monday, 19 October 2020

Karl Richter 15. Oktober 1926 - 15. Februar 1981

Meister - Dirigent, Chorleiter, Organist und Cembalist.

BMB Wins Judgment in BCDR: Financial Impact, if any, Likely to be Negligible

A First Step May be Important Even if It is Small

11 October BMB announced that the Bahrain Chamber for Dispute Resolution (BCDR) had ruled in its favor in a case the Bank brought against 3 of its former executive officers. English version of press release here. 

The BCDR ordered the three unnamed defendants to pay BMB USD 13,198,309 plus BHD 100 for attorney’s fees.

As per the October press release, BMB initially brought the case in 2014 but suspended it while Bahraini authorities pursued a criminal case which resulted in a November 2018 judgment of prison terms of 3 years for the defendants.

From the original date of the case, we know this case related to the 2013 scandal previously discussed here.

Recall that BMB has another BCDR case relating to its 2018-2019 scandal discussed here (suit) and here (scandal). Interestingly, in this latter case the Bank indirectly confirmed the defendants’ names by confirming the accuracy of an AlAyyam press report.

As to this case (2013 scandal), we don’t have the names of the defendants However, in early discussion of the 2013 scandal, the Bank said that it had fired the then CEO, CFO, and other senior officers. 

From a July press release dated 20 July but published on the Bahrain Bourse 21 July we know that the Bank originally filed suit at the BCDR against seven individuals including some of its former officers. The fate of the remaining four is unknown.

How do we know this? Or think that we do?

Because the October press release cited above references a 20 July 2020 disclosure.

Note that BMB also issued a press release dated 20 July published that day regarding BCDR case related to the 2018-2019 scandal.

As noted by the Bank, none of the 2013 scandal defendants currently lives in Bahrain and that uncertainly relating to enforcement of this judgment by a foreign court means the Bank is unable to estimate the ultimate financial effect.

Three comments.

First, given the “hole” that BMB is in, 100% collection is not going to materially change the Bank’s dire position. Nor would 100% of the other case. Together both total roughly 10% of BMB’s negative equity. 

But the directors are to be commended for pursuing this action. Rather then let it languish as the earlier board appears to have because every dollar does count and fraud cases need to be pursued with vigour. 

One--well at least AA--might wonder if there were reasons why some directors would have preferred to let sleeping dogs lie. 

Second, the defendants have had ample time to arrange their financial affairs to limit the Bank’s ability to collect even if a foreign court enforces the BCDR judgment.

Third, also unless the defendants were guests of the Bahrain state during the criminal proceeding with “time served” counted against their three year sentences, it’s likely they did not serve any time.

Tuesday, 13 October 2020

Remembrance of Rama IX - 4 Years Later It Appears that Much Has Sadly Been Forgotten

15 October 2016 / 15 ตุลาคม พ.ศ. 2559  

Crowds gather at the Royal Palace to sign the condolences book for รัชกาลที่ 9.

5 November 2016 /  5 พฤศจิกายน 2559  Silom Avenue Bangkok

An important message on the sign:  "ทำดีเพื่อพ่อ" 

"Do Good for Father" in the sense of do good things to honor father.  

Rama IX was called "father" for all he did for Thais and Thailand.

13 October 2020 / 13 ตุลาคม 2563

In four short years it appears that many Thais have forgotten over 70 and one half years of his service to the people and country of Thailand.

Some still remember พระบาทสมเด็จพระบรมชนกาธิเบศร มหาภูมิพลอดุลยเดชมหาราช บรมนาถบพิตร

Pictures and text from AA's elder and wiser brother, expert in many things Asian.   

Friday, 9 October 2020

محمد رضا شجريان


 روز و شب خوابم نمیآید به چشم غم  پرست

Wednesday, 2 September 2020

Dana Gas - Restructuring of Nile Delta Sukuk on the Horizon

DG's Board - Ready to Continue the Show

Full repayment of DG’s sukuk is contractually due on 31 October.

As outlined below, barring a miracle, another rescheduling is “on the cards”, continuing the second longest running "play" without a real plot.

According to DG’s 1H2020 financials (note 16), DG has reduced the principal of the sukuk USD 70.7 million to USD 309 million via buybacks that took place after 30 June. 

Its reported cash balance as of 30 June 2020 was some USD 366 million.

However, USD 58 million of that amount represents DG’s 35% share of Pearl Petroleum’s cash, meaning that amount is (a) in PPL’s account not DG’s and thus (b) not immediately available to DG. (Note 13). The “miracle” of consolidated financial statements.

On that basis DG’s 1H2020 cash is really USD 308 million. Of which it used an amount to fund the Sukuk buybacks.

How much?

On page 5 of its 1H2020 Investor Presentation (IP), DG says that the buybacks will result in “overall cost savings in profit and repayments at maturity of USD 10 million.” 

The “profit” rate on the Sukuk is 4% per annum paid quarterly (January, April, July, and October).

Let’s assume half a year of interest on USD 70 million or some USD 0.7 million.

That would mean that most of the remaining savings was discount on principal.

So very roughly a 14% discount on principal USD 70 million “retired” at the cost of USD 60 million.

Investors in the Sukuk probably rightly considered the discount a small price to pay to exit given the likelihood of another restructuring and the company’s continuing weak financial position and performance.

That likely leaves DG with a cash balance accounts lower than the principal balance of the Sukuk. If it has been lucky with cash inflows cash outflows, perhaps the amount is equal to the Sukuk.

In any case the amounts are so on the edge that it is unlikely—barring a miracle—that DG will have sufficient cash to both repay the Sukuk and maintain a minimum operating balance.

Other than the sale of its Egyptian Assets—whose value DG was trashing not so long ago—DG doesn’t seems to have have a lot of options to a rescheduling.

Perhaps the remaining Sukuk investors will take comfort in this statement from DG’s IP:

“Any proceeds from Egypt will go to paying this down. In case we don’t sell Egypt, we are considering various options”

AA will leave it to you to contemplate whether the options will be religious or financial. Or perhaps some combination of both. 

As an indication of where things are likely to be headed, DG has engaged the good folks at Houlihan Lokey to provide financial advice on the Sukuk.

If you don’t know, HL has quite a reputation in debt restructurings. Less so in “miracles”.

Turning to financial performance or perhaps more accurately financial “results”, DG had a loss of USD 19 million for the first six months of 2020 versus a USD 140 million profit for the corresponding period last year. 

As allowed by the Sukuk, DG paid a cash dividend of some USD 104 million in April. Money that might come in handy right about now.

In addition to their firm religious convictions, DG’s board is known for its financial prudence and acumen.

Despite those negative comments, DG apparently actually had a good half year as per their Chairman

The Company has demonstrated a strong and resilient financial and operational performance in the first half of 2020.We generated an operational net profit (before impairments) of $18m, which demonstrates our ability to operate successfully in low-cost environments.

I’m sure you agree that Elon Musk couldn’t have put it any better. Sadly, DG has no tax credits to sell to “manufacture” a positive bottom line.

As to the ever promising (but not necessarily delivering) future, things are apparently equally rosy.

We remain focused on strengthening our balance sheet to better position the Company for the future and we plan to press ahead with certain strategic actions regarding our asset and Sukuk which will benefit all our stakeholders alike.

DG’s shares are down some 25% over the past 12 months.

This could be the opportunity of a lifetime, but it probably isn’t.