Investment Dar - Forward Steps on Legal Agreements for Restructuring

AlQabas quotes sources on the Creditors Committee that Committee is moving forward with the legal documentation and the implementation of the restructuring despite the fact that the Central Bank has  not yet approved TID's financials.  (Those of you reading the Arabic text will notice that I have added the words "not yet" as the original wording didn't make sense.)

Two working meetings involving the Creditors Committee and its legal consultants will be held in preparation for a meeting at the end of February at which the wider group of creditors will be asked to give their final agreement to the legal documentation for the restructuring.  It's been agreed  in principle that the first meeting will be held on 8 February to agree the final draft of the legal model (documentation?) for the plan.  At this meeting two of the members of the Committee will be formally delegated to work with the legal consultants on finalizing certain technical details.  As per the article, it's been agreed that Lloyds Bank will be one of them.  A Kuwaiti institution will be chosen as the other. (Presumably,the choice of a Kuwaiti and an international firm is because implementing the plan involves steps in both Kuwaiti and "international" jurisdictions).  The article notes that the Committee's legal advisors intend to consult with these two firms and obtain their advice on numerous non legal technical points related to the transfer of the assets, the mechanisms for doing so, and the location of the entities that hold these assets).

A second meeting will be held on 18 February to put the final touches on the legal documentation. And then a wider creditors meeting will be held at the end of the month.

Based on my admittedly a tortured translation (either I'm off my game or AlQabas' reporter is), some comments:

1. Clearly, the creditors have a sense of urgency to get the deal done.  They are not waiting for CBK approval of the financials. This urgency is probably driven by two things.  First, having labored so long to get approval from a majority of creditors, the Committee wants to bind that approval through the signing of definitive documentation.  The longer this takes the more chance  that some creditors will withdraw their previous approval. Some approvals already may be contingent on agreement before the end of February or some other uncomfortably close other deadline.  Second, the creditors have evidenced a keen desire to get TID's assets under their firm control, e.g., the request that the CBK to appoint a monitor at TID during the negotiations, the repeated comments about disclosure, transparency and corporate governance, the requirement that the Company appoint a Chief Restructuring Officer, etc. 
2. What is hard to understand is the delay at the CBK.   Given the importance of TID's restructuring, it would seem that the CBK would be working hard  to finalize its review. 
3. With respect to the meeting schedule outlined above, I wonder if  the plan is to sign the definitive legal  documentation for the restructuring at the end of February.  If that is the case, then it would seem that following the 8 February meeting, the Committee would send creditors draft documentation for comments with the meeting on the 18th designed to address any points raised and allow time for the circulation of a revised draft.  Then signing could take place at the end of that month.  If not, then it would seem signing would occur sometime in March.
   
4. What will be very interesting will be how the restructuring deals with the non signing creditors.   And how those non signing creditors will react.  Will there be a late rush to join the restructuring?  Or will these creditors pursue TID for payment in court?  A right it seems they retain in the absence of a legally enforceable "cram down" in Kuwait.   If so, it would seem highly likely that one or more of them would challenge the asset transfers because after the assets are transferred and pledged to the signing creditors, there will be no assets of any significant value left in TID with which to settle their debts. 
5. So successful meetings in February may not be the last act in this long running saga. 
6. In any case, besides potential lawsuits, at a minimum, TID will probably have to fulfill the same KSE requirements as Global Investment House: obtain shareholder approval of the transfer and pledge of assets and then request KSE approval before making the transfers.  It's hard to see how the KSE could or would want to cut a different deal for TID.