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| Dr. Herbert West at the GFH Medical Center, AA in Background,GH Kuwait on the Table |
As the picture above
indicates Gulf Holding KSC (Closed) ("GH") has “come back to life” after a prolonged state of
dormancy apparently though efforts by GFH (now its majority shareholder) over
the past 3 years.
Information on GH
is fragmentary. When corporate distress
hits, a typical reaction in this part of the world and others is to go silent. Or to change the name of the institution in
the hopes that the public won’t know that the newly named entity has a less
than illustrious past. A “unicorn” loses
its horn and turns to good, one might say.
More info is emerging after GH’s reported awakening
from its coma.
But what do we
know? Not much.
As usual AA has your
back.
This the first of four planned
posts will look at shareholding.
GH
is a closed private Kuwaiti company and as such need disclose less than a
public company. The nature and extent of
the “problems” at GH was severe, probably leading to more than the normal reticence from the
company and its shareholders.
We know
that the company was created “in Kuwait in November 2005 by well-known
investment companies in the region” who for obvious reasons chose to remain less
well known in recent years. Web searches
do not disclose shareholder names. If
there was a self-congratulatory announcement of the formation of the firm back
in 2005 (which would be reasonable given the year of creation), it has
disappeared down the memory hole. Some
sources refer to five founding shareholders.
We do know that GFH was
involved. If you look at annual reports
back to 2012 (at least), you’ll see references to GFH officers holding senior positions
at GH and on its board. Chairman of the
Board. CEO. But no mention on GFH’s shareholding which we only about learned from GFH’s 2018 FY Annual report. GFH's investment in GH was fully provisioned sometime in the
unknown past.
Some information on
that topic emerged in Note 14 in GFH’s 2Q18 unaudited interim financials and in
Note 20 in GFH’s
audited annual 2018 financials. GFH
held a 19.79% share (carrying value nil) prior to becoming a 51.18% shareholder
through the June 2018 acquisition of an additional 31.39% in shares.
One other shareholder has
self-identified. That is GBCorp Bahrain
(20% owned by GFH). In Note 6 to GBC’s 2018
annual report, GH emerges from nowhere shown as fully written off with the
date captions for this entry strangely set to 2014 and 2013 in the 2018 AR. Amount shown before provision is USD 13.4
million. Assuming AA is correct and that
1 USD = KWD 0.2920 in November 2005 GBCorp would have 4.9% shareholding based
on GH’s KWD 84.7 million paid in capital.
But we don’t know what GH’s original paid in capital was and whether
there were additional amounts raised or earnings capitalized via bonus shares. Remember the Note in GB's financials because you’ll find their plaintiff’s claim against GH outlined here. We’ll
be looking at that in a future post.
What
can we do to find the others?
My wise
mentor on things Middle Eastern once told me “AA, look at the boards of
directors and you’re likely to discover undeclared shareholders, especially if
you see shaykhly names.” Either the shareholders themselves or their known
associates or “friends”.
So, for example, at one time two sons of Shaykh Zaid
were on the board of a bank listed on the ADX.
ADX shareholder records showed their shareholding as minimal. Were their board memberships an example of only selfless public service? Or that they were undeclared
major shareholders? AA was told by
someone who should know that it was the latter.
So other than GFH who are shareholders?
Besides
the GFH members disclosed on GH’s website, the GH board includes one individual
from Kuwait Real Estate Company, one from INOVEST, and one from GBCorp.
It’s hard to imagine an individual seeking
to associate with GH. That wouldn’t be
much of a reputation builder. That
suggests that KREC and INOVEST are the missing two shareholders. We don’t know what their holdings, if any,
are. And also if there were other shareholders. If GBCorp is a shareholder, was Global
Investment House in Kuwait one as well?
There is other information on an earlier shareholder.
Mr.
Ahmed Mohammed Abdulla Al Ameer of Bunyan Real Estate Company a subsidiary
of Bayan Investment Company Kuwait is described as one of the principal
founders of GH. He was Vice Chairman of
GH for a while. He doesn’t appear any
longer. Was BIC/BREC a (partial) source
of the shares that GFH purchased?
In the comings posts we’ll take a look at the sorry state of GH, prior to GFH’s
rescue.
And as well raise an interesting legal issue
for discussion by the community.
Posts
