Gulf Finance House -Deutsche Bank Converts Another US$10 Million to Shares - Stealth Exit from GFH?

 

GFH announced on the Bahrain Stock Exchange today that Deutsche Bank had converted another US$10 million of the murabaha to shares in GFH.  That's another 26,315,789.

Since the conversion was done at US$0.38 per share and GFH's shares are trading at  US$0.25 on the BSE and about US$0.01 to US$0.02 more per share on the KSE, it's seems logical that this conversion is a way for DB to exit its exposure to GFH.  

That's at a 28% to 32% discount.   And that frankly conversion doesn't make much sense.  If one wanted to make a "wise" investment in GFH shares, one could buy them on the open market now and when one got repaid from the murabaha have roughly 30% more shares.

I'll be waiting to see the 31 March 2010 financials to see if GFH has increased its Treasury shares in 1Q2010.

At this point based on previous announcements I've seen, DB has converted US$50 million in total for 131,578,946 shares which would give them just a whisker less than 7% in the bank which should require they be disclosed as a major shareholder.  Earlier post here.  As of today they are not shown as a major shareholder on the BSE website.  But then neither is the 26 November downgrade of GFH by S&P (the first of several downgrades) yet reflected on GFH's website.

And on that basis assuming that DB is still holding all the shares it converted it would have a paper loss of US$13,815,790 (assuming a current share price of US$0.275).   Hard to believe that DB would keep piling on loss upon loss.  This has to be a way to get out of the credit for them.