Central Bank of Kuwait Denies Noor and Gulf Investment House Extension on Treasury Share Purchase

I don't remember seeing this sort of refusal before. But I may have missed it.

In any case today, the Central Bank of Kuwait announced that it had refused to extend its earlier approval to both GIH and Noor to purchase or sell up to 10% of their own stock.   Announcements below.

Also anyone out there who can help with tafsir on the legal references please do.  I don't understand the reference to the Commercial Companies Law.  Article 115 has to do with the issuance of "redeemed shares".  Could this be a reference to Article 114?  Nor am I familiar with Ministerial Order (sometimes Ministerial Resolution) #10 of 1987 nor that of #11 of 1988 which amended it, nor #273 of 1999. 

In any case, it would seem a prudent regulatory move to restrain investment companies from buying treasury shares until their financial conditions had shown robust improvement.  Certainly, at this time companies have better uses for their limited liquidity than punting in their own shares.  You'll note in both cases the two firms asked permission to buy their own shares.

GIH

[9:13:26]  ِ.عدم موافقة المركزي لبيت الاستثمار الخليجي بشراء مالايتجاوز 10% من اسهمها
يعلن سوق الكويت للاوراق المالية بأن بنك الكويت المركزي افاد بعدم الموافقة
على طلب تجديد سريان الموافقة لشركة بيت الاستثمار الخليجي (الخليجي) بشراء ‏
ما لا يتجاوز 10% من اسهمها المصدرة ويمكن للشركة فقط القيام بالبيع من رصيد
الاسهم المشتراة المتوافرة لديها وذلك لمدة ستة اشهر تنتهي في 17-3-2011.‏
حيث ان ذلك الامر يتطلب ضرورة الالتزام بما وضعه البنك المركزي من ضوابط
وشروط في شأن تملك الشركة المساهمة لاسهمها اضافة الى ضرورة الالتزام ‏
بأحكام المادة 115 مكرر من قانون الشركات التجارية واحكام القرار الوزاري
رقم 10 لسنة 1987 وتعديلاته بموجب القرارين الوزاريين رقم 11 لسنة 1988‏
ورقم 273 لسنة 1999.‏

Noor

[8:50:52]  ِ.عدم موافقة المركزي لنور للاستثمار (نور) بشراء مالايتجاوز 10% من اسهمها
يعلن سوق الكويت للاوراق المالية بأن بنك الكويت المركزي افاد بعدم الموافقة
على طلب تجديد سريان الموافقة لشركة نور للاستثمار (نور) بشراء ما لا
يتجاوز 10% من اسهمها المصدرة ويمكن للشركة فقط القيام بالبيع من رصيد
الاسهم المشتراة المتوافرة لديها وذلك لمدة ستة اشهر تنتهي في 28-3-2011.‏
حيث ان ذلك الامر يتطلب ضرورة الالتزام بما وضعه البنك المركزي من ضوابط
وشروط في شأن تملك الشركة المساهمة لاسهمها اضافة الى ضرورة الالتزام ‏
بأحكام المادة 115 مكرر من قانون الشركات التجارية واحكام القرار الوزاري
رقم 10 لسنة 1987 وتعديلاته بموجب القرارين الوزاريين رقم 11 لسنة 1988‏
ورقم 273 لسنة 1999.‏
 

Global Investment House - Al Madina Wins Appeal Against Global

"You're it!"

Today Al Madina Finance and Investment announced (on the KSE and the DFM) that the Appeals Court had overturned the earlier judgment in Global's favor which was rendered by the MOCI's Arbitration Tribunal.

Under that earlier judgment (last April), Al Madina had been ordered to pay Global:

1. US$10,011,224 dollars principal of a loan plus
2. US$300,000 in compensation

If you remember the history, at that time, Al Madina noted that the  judgment was only preliminary and not final and that it would appeal.

Today it noted that on 8 September the relevant court had voided the MOIC Arbitration Tribunal's judgment and had referred the case to the Department of Experts for study.  Al Madina noted this meant that any steps taken by Global to enforce the Tribunal's judgment would be void.

For its part, Global retorted on the KSE (text Arabic only below), that the court judgment was preliminary and not final. And that Global would appeal.

In effect, the game of tag continues.

[12:39:50]  ِ.ايضاح من (جلوبل) بخصوص الدعوى رقم 2010/1675 ‏
يعلن سوق الكويت للأوراق المالية عطفا على اعلانه السابق بتاريخ 04-04-2010 ‏
والخاص بمنازعة التحكيم رقم 2010/41 والتي صدر فيها حكم من هيئة التحكيم ‏
التجاري فى غرفة صناعة وتجارة الكويت بالزام شركة المدينة للتمويل ‏
والاستثمار (المدينة) بان تؤدي لشركة بيت الاستثمار العالمي (جلوبل) ‏
مبلغ وقدره 10,011,224 دولار امريكي قيمة اصل الدين ،ومبلغ 300,000 دولار ‏
امريكي على سبيل التعويض .‏
تفيد شركة (جلوبل) بانه صدر فى الدعوى المذكورة ‏حكما بجلسة 08-09-2010 ‏
والذي جرى منطوقه حكمت المحكمة: ‏
ِ1-ببطلان حكم التحكيم الصادر عن مركز الكويت للتحكيم التجاري بتاريخ1-4-2010‏
لدعوى التحكيم لسنة 2010/41 .‏
ِ2-‏وفى موضوع الدعوى :باحالتها الى ادارة الخبراء ‏
كما افادت شركة (جلوبل) بان هذا الحكم ابندائيا تميهديا غير منهي للخصومة و
ليس نهائيا وانه سوف يتم الطعن عليه بالاجراءات القانونية المناسبة فيما ‏
اذا صدر فى غير صالح شركة بيت الاستثمار العالمي (جلوبل) ‏

Gulf Investment House - Debt Problems Largely Solved: Only US$7 Million of Foreign Debt Left KD45 Million Rescheduled by KFH

In an exclusive interview, AlWatan quotes GIH's CEO, Badr Abdullah Al-Ali, saying that: 

1. GIH has repaid all by US$7 million of its foreign debt.  The remaining amount is due in November and GIH may prepay given its strong financial condition.
2. The Company has been successful in rescheduling KD45 million with KFH (who own about 30.72% of GIH's shares) over five years.  No doubt KFH's shareholding interest was a major  positive factor in achieving the rescheduling agreement.  This amount is substantially all of the non foreign debt of the Company - whose total bank debt as of 30 June 2010 was KD56.8 million.  It's unclear at that point just how much foreign debt remained. In May if I remember they were reported to have KD13 million of foreign debt.

With respect to 2010 financial performance, GIH reported 1H10 losses of KD1.9 million roughly half of 1H09's KD3.8 million, though it should be noted that for the full year of 2009, GIH's losses were KD20.5 million. 

KFH's support provides a nice safety net for GIH's future which Mr. Al-Ali sees as bright.

Gulf Investment House - KFH Finalizing Restructuring

Quoting informed sources at KFH (a 30.72% shareholder), Issa Abdul Salaam at AlQabas reports that KFH is on the verge of concluding the restructuring of GIH's debts.  The Company has reportedly had success in negotiations following a repayment of part of its past due obligations and is expected to convert short term loans to long term.

Gulf Investment House to Settle Remaining KD13 Million in Foreign Debt

AlWatan quotes Badr Abdullah Al-Ali, CEO, saying that GIH is in negotiations with five Gulf financial institutions to settle its remaining KD13 million in foreign debt.  The goal is apparently to finalize the process by this coming November.

You'll recall Badr appeared earlier in this blog as one of the members of The Investment Dar's Creditors' Committee.

In 2009 GIH reported a KD20 million loss.

For 1Q10, the loss was down to KD1.2 million.  At 31 March total borrowings were some KD57.8 million of which KD33.5 million was from related parties.   By looking at the 2009 related party note it appears that the then KD23 million in murabaha from related parties were from major shareholders. It's probably a safe bet that this is the case at 31 March 2010.  If I'm not mistaken (not a certainty as close readers of this blog know!), KFH owns 20% of GIH.  I tried to check but the KSE website is balking when I try to open the "Investment" Firms sector webpage.  It pays to keep one's eye on the ball.  According to the KSE, KFH owns 30.72% of GIH.

By settling this KD 13 million, GIH would have about KD9.3 million of non related party debt remaining.  However, it's not clear if it has settled any debt since 31 March.  In which case this proposed repayment may result in it becoming debt free.  In any case even after the proposed payment, KD9.3 million remaining its non related party debt burden would be quite manageable.