GFH Financial Group 29 December OGM – New Thinking on Treasury Shares?

Key "Takeaway" from the OGM: If you've been following GFH you know that over the past two years they have "invested" a lot of money in Treasury Share trading. FY 2019 OGM Agenda Item #6 may signal a change in strategy or perhaps "mission accomplished". Or perhaps a new way to "clean out" accumulated Treasury Shares?

The measure proposed using 140 million of GFH's Treasury Shares to fund strategic acquisitions. Expect a subsequent post on this topic.

GFH held an Ordinary General Meeting on 29 December 2019. PPAs you hopefully noted from the "an" above, this was not "the" annual OGM held to approve the audited annual financials, etc. Rather it was an OGM called to obtain approval for some near term actions that GFH's Board wanted to take. Actions that could not "wait" until the annual OGM held after the release of GFH's audited FY financials.

These urgent items are securing approval for (a) the issuance of up to a USD 500 million sukuk and (b) the use of 140 million in Treasury Shares for a strategic acquisition(s) of financial institution(s).

Once GFH publishes its FY 2019 audited financials, we can expect another OGM to be held.

While GFH has posted the OGM minutes, they are available in Arabic only. GFH is known to be careful with expenditures of its shareholders funds so that not a penny is misspent.

As usual AA has the back of interested parties whose lack of Arabic language skills is perhaps compensated by their investment acumen.

As befits his surname or perhaps because of it, GFH’s CEO was appointed as “Chair” of the meeting.

Agenda Item #1 – Approval of minutes of the FY 2018 OGM. No shareholders had any formal comments or objections to the minutes which were then unanimously approved.

Agenda Item #2 – Approval of Board recommendation for GFH to issue up to USD 500 million sukuk through an SPV, subject to regulatory approval. No recorded comments. Approved unanimously.

Agenda Item #3 – Authorise the Board or whoever they delegate to take all necessary actions to issue the Sukuk. No recorded comments. Approved unanimously.

Agenda Item #4 – Authorise the CEO to take all necessary steps “without limit” to secure regulatory approval for the sukuk. Unanimously approved. AA has no comment on the intent of the phrase “without limit”. But invites those with ideas to comment.

Agenda Item #5 – Authorise appointment of SICO as market maker in GFH stock until the OGM for the year end 31 December 2022. 

This item sparked the first and only question from an unnamed shareholder holding an undisclosed number of shares. He asked if there weren’t any other companies who made a better offer than SICO. 

Mr. AlRayyes said that other offers had been been received. He then proposed an amended Agenda Item to authorise the Board to select the market maker they felt was the most “appropriate”. The measure passed with 100% approval.

Agenda Item # 6 – Authorise the use of 140 million (equal to 3.8% of total issued and outstanding shares of GFH) of the Treasury Shares currently being used to “make a market” in GFH shares for a strategic acquisition of shares in a financial company, subject to approval of CBB, and entrust the Board or whoever they delegate to take all necessary measures. Unanimously approved.

Does this mean that GFH has rethought the scope of its Treasury Share transactions? Clearly, from Agenda Item #5, GFH intends to continue them at some level? Or is there something else behind this interesting decision? Another post will be forthcoming after GFH publishes its FY2019 audited financials.

Agenda Item #7 – To discuss any matters in connection with Article 207 of the Commercial Companies Law. Article 207 allows the introduction of (new) agenda items at an OGM, that is, items that were not included in the original agenda. There being none the OGM was concluded.