Quoting unnamed banking "sources" AlQabas reports that local banks seem to be comfortable with TID using the Financial Stability Law as a tool to implement the restructuring. As you're aware, while TID has advised that it has all the necessary legal documents ready, it has not sought to implement the restructuring because dissenting creditors are still pursuing the company in court. The FSL contains a cramdown mechanism and so this would be a way to remove the legal weapon from their hands.
Two other points in the article worthy of note - perhaps much more worthy of note than the first for the implications they carry.
- Morgan Stanley (advisor to the Creditors Committee) reportedly has two studies - an optimistic and a pessimistic one. Under the former the banks recover 100% of their dues. Under the latter 78%. AA: This is perplexing because in such a case it would make absolutely no economic sense for a creditor to sue. Are the facts being fixed around the FSL requirements? What's also clear here is that when the restructuring is over, TID which has pledged all its assets to the restructuring is going to left as little more than two guys, one desk and maybe a prepaid phone.
- The sources also did not hide their concerns (literally fears) as to how the FSL might be applied to TID. This would be the first use of the law. AA: I've posted some thoughts on possible issues. One major stumbling block remains the company's 2008 audited financials and the Central Bank of Kuwait's apparent insistence on what would seem to be from the debate between CBK and TID to be rather substantial provisions and write-downs.
It's pretty clear that creditors (or at least 80% of them) are eager to close this file by implementing the restructuring. Perhaps, the authorities in Kuwait are also interested in removing this case from the newspapers. If there is a will, a way can be found.
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