The Investment Dar - Adnan Al-Musallam (Chairman/CEO) Interview

AlQabas published a summary of Mr.Al-Musallam's interview in Dubai with AlArabiyya.

Here are the main points:

1. TID never requested that a reduction ("haircut") in principal from its creditors. 
2. The restructuring agreement that 2/3 of the creditors have agreed to ensures them their full rights of repayment.
3. Full repayment is embodied in the transfer of assets to a creditors' committee whose agreement is required for the sale or any other dealing in the assets and as well their safe keeping/preservation.
4. TID's problems occured because at the onset of the crisis creditors refused to rollover/extend debts, shareholders were unwilling to provide more funds and asset sales were not possible.
5. He noted that these difficulties occurred even though TID had diversification in its sources of income - no one source was more than 8%.  TID also had a similar diversification in its use of funds.
6. Liabilities range between KD950 million and KD 1 billion.
7. The 1/3 of creditors who have not agreed are composed of those who are (a) waiting for board meetings to make a final decision or (b) those who refused completely.  And those (presumably the latter group) are very small not worthy of comment.
8. He called for all creditors to join the restructuring or those entities regulating those creditors to agree to the restructruing to achieve their rights because "every contract that TID entered into is subject to the Shari'ah".
9. Those who go to court will wait 3 to 5 years to obtain their rights and won't earn any profit.
10. Therefore, it's in everyone's interest to sign up.

Some comments in the article:

1. His comments indicate that TID does not have a binding restructuring agreement on all its creditors.  Those who have not agreed retain their rights to sue in court.   To the extent that they believe the restructuring fundamentally affects their rights they may sue to have it overturned.  And may be successful.  Certainly, the transfer of all of the company's assets to a segment of creditors would appear to be a preference of one group over another.  In other words, talk that "TID has struck a deal" is kalam faadi. (= empty talk)
   
2. It's unclear to me what is the full import of his comment about Islamic contracts and lack of profit for those who pursue legal means.   Is the Islamic rule that in a court case interest does not apply?  But that would contradict with International Investment Group's lawsuit with the Islamic Development Bank where interest was granted by a local court.  If there's anyone out there who  can explain this,  please post.
3. The comment about supervisory authorities is unclear.  Is this a reference to central banks?  To Shari'ah boards?  It seems to be an appeal over the heads of the creditors.
   
4. For a group not worthy of mention because it's so small, Mr. Musallam is making a fairly strong pitch - which again suggests to me that despite the brave talk of having struck a deal, TID has not.  And, thus, is trying to find a way out of  a difficult place.

As of today, it appears that TID has still not cleared its fiscal 2008 financials through the Central Bank of Kuwait.

And as a final note, if someone out there has a contact at TID, would you be so kind as to suggest they tidy up their website a bit.  The 25 December press release needs some editing attention.  And the 2007 earnings announcements are a bit out of place.