Gulf Bank: The Golden "Prize"

 

The Gold's There.  Look Closer.

According to the informed sources of Al Watan, a European Group is now bidding to acquire a significant/meaningful share in Gulf Bank through the services of a Kuwaiti intermediary.  And is therefore bidding against the Qatari Group.

The article goes on to say that GB is expected to declare a profit of KD35 million for the first nine months of 2010.  3Q10 provisioning is expected to be much less than during the first two quarters this year  because GB has provisioned 100% of Saad and Al Gosaibi exposure (KD 120 million!) plus 100% for The Investment Dar, 50% for Global,  and 50% for Aayan Leasing and Investment.

Anyone out there know if the provision levels for TID, Global, and Aayan are Central Bank mandated?  Or if they're just GB's calculations.

I guess Global may be among the worlds leading investment banks  for M&A as Mr. Al Sumait said not so long ago (a post is coming on that topic) but seems to be in rather poor company with respect to its loan repayment prospects.  Half full or half empty?  But nonetheless better than some others.

The Investment Dar - Changes to Restructuring Plan?

Al Qabas reports that this Wednesday, TID held a meeting in Dubai with the Creditors Co-ordinating Committee and Ernst & Young.  This is the first meeting between the CCC and E&Y.  Earlier the CCC had submitted a letter to E&Y asking that it look out for the interests of lenders as well as the owners of the Company.   

As you'll recall, E&Y has been tasked by the Central Bank to perform the technical study required under the FSL as part of the CBK's determination of whether to recommend that the Special Court make the final decision to either allow TID the protection of the FSL or deny it.  So E&Y is working for the CBK and not the lenders or the owners/borrower.

What's intriguing is that the article also mentions that the CCC has been pressuring the Company to inform it of changes and amendments in the restructuring plan which were made without the knowledge of the lenders.  If you've read earlier posts here, you'll recall that I mentioned in March that the FSL gave the CBK the right to impose additional conditions on the borrower and amend the plan in order to improve the probability of the borrower's performance.  

In this situation, the CBK holds the trump card.  It's "yes" vote is necessary for obtaining entry under the FSL.  Given that a liquidation under local laws would be messy and greatly reduce recovery prospects, both TID and the lenders are going to find it difficult to say "no" - though I suppose they can try to negotiate.   The CBK can counter by citing the report of E&Y - the independent experts asked to assess TID's financial condition and the plan.

It's also important to note that Al Qabas' account is only as good as its sources.  Last July the newspaper reported that E&Y was submitting a "final" report.   Though I suppose one possibility is that E&Y's report at that time said that the Company's  financial condition meant the original plan wouldn't "work" and needed to be modified. 

Absent a direct link into the creditor group, we'll have to wait to see what develops.  If any creditor out there reads this as an invitation to comment, he'd be right. Or, if the creditor prefers, make contact outside the blog via our contact form.

The article also mentions that during the  meeting Brother Adnan, TID's Chairman/CEO, reportedly advised the lenders that he had consulted God before founding the company.  «استخار الله ثم اصدر اوامره في تأسيس شركة تحوي بعض الاصول» .  Subsequent events would appear to confirm that he failed to maintain subsequent contact for management advice.  Or perhaps ignored what advice he did receive. Or perhaps he got a "wrong number" in his original contact

Some of the creditors expressed their disapproval over some of the decisions that Mr. Al Musallam had taken.  After a closed debate, he left the meeting and did not return, leaving the CCC and creditors with an advisor.  Some creditors are reported to have objected that the advisor had no legal status. He was not an officer of TID.  He retorted that he had a position in one of the external entities (whatever that means).

Things aren't going well.  

It seems that relations between TID and its lenders are difficult.  Mr. Al Musallam should remember that during the rescheduling the lenders will be poking their noses into his business.  While the restructuring covenants are no doubt "arranged with the greatest of care in the hopes that the cashflow soon would be there", there will be times when interpretations of meaning will arise.  Disgruntled creditors can read things more strictly if their backs are up.

Rumor: Hassan Al-Ammari Resigns from International Investment Group

Citing an interested source (one with a connection to IIG) Al Watan reports that Hassan Salim Hassan Al-Ammari has resigned from IIG's board due to the lack of co-operation from the Chairman/MD, Dr. Abdulaziz Bader Al Jena'ai.  According to Al Watan's source, Hassan has been unsuccessfully asking for financial and other information for some nine months.

Hassan represents Al Baraka Investment and Development Co (which owns about 5.21% of IIG).

IIG has been suspended from trading on the KSE for failure to provide financials for both 1Q10 and 2Q10.  The last financial it did supply was FYE09 which showed a loss of KD36.5 million versus a KD21.5 million loss the year earlier.

You can read more on IIG by using the tag International Investment Group for earlier posts.

HSBC: Restrictions on Global under its Restructuring

The Short Fuse on Global's Restructuring

Al Qabas has a summary of a recent HSBC report on Global's restructuring.

The main point and the reason for the picture above is the repayment schedule:  10% of the principal in Year 1, 20% in Year 2 and a crushing 70% in Year 3.  The result of the unrealistic short three tenor. 

I've commented on this before, but that won't stop me from saying it again.  It's highly unlikely that Global is going to be able to meet the repayment schedule even with one or two small miracles coming its way.   With the short fuse and the extensive trip wires (by way of covenants below), the spectre of a second default has to be haunting Global's management and shareholders.   It will probably also give pause to clients being solicited by the firm for new business.  

The banks should be worried as well.  One can argue that a short leash increases their protection.  But too short a leash is not good either  - particularly when you want the dog to hunt.  A bit more breathing room - say two more years - and their potential headaches may be much much less.

Restrictions include the customary limits on distributions (dividends), taking new loans, making capital expenditures as well as a requirement that at a minimum the value of assets must be 0.75 times the amount of the loan.  Global is required as well to maintain capital adequacy at 5% until June 2011 at which point the ratio increases to 7%.

Just rounding out the article.  As has been mentioned earlier, the lenders got a 1% flat restructuring fee.  And a 0.25% extension fee from the date of default to the date of the agreement.  Both fees capitalized into the existing pre restructuring loan amounts.  The lenders also have the right to convert their debt to equity if Global doesn't repay 40% of the debt in the next two years.    That last condition coupled with a restriction on dividends seems to me to pretty much make the raising of any new capital a moot point.  Unless of course they're irrationally exuberant investors.

Commercial Bank of Kuwait Terminates S&P Ratings

On 23 September, S&P announced it was withdrawing from rating CBK at the bank's request.  In line with standard operating procedure for rating agencies, S&P gave a final rating.

S&P affirmed its 'BBB/A-2' long- and short-term counterparty credit ratings on Commercial Bank of Kuwait

(CBK) with a stable outlook. 

The rating agency said it had bumped up CBK's rating by one notch to reflect that it was a systemically important bank and that the likelihood of government support was high. 

Then it went on to say that it estimated CBK's distressed loans at 20% of the total loan portfolio.  And that provisioning needs are likely to weigh heavily on the bank in the next two years.  

It's clear from that language that CBK is not providing current data.  Either the deterioration in the loan portfolio is sudden or S&P just got an inkling.  In any case, not a sign of the sort of candor one would expect between issuer and rating agency.

I suspect the ongoing problems in the loan portfolio and S&P's likely future focus on them were the reason for the bank's "excusing" the agency from further rating duties.

Some thoughts:

1. CBK is not alone in its aggressive business posture.  This suggests that other banks may be experiencing increases in their distressed loans.  CBK as the proverbial canary in the coal mine.  The banking system had just under 10% at FYE 2009 - already a distressed scenario.  
   
2. This a rather short-sighted though common reaction.  Shoot the messenger for delivering bad news.  Pretend that everything is OK. The problem is that CBK's loan portfolio will not recover miraculously.  Future earnings statements will reflect the provisions.  And the fiscal year end report will reflect the percentage of distressed loans.  Frankly, this just looks bush league.  
3. In addition,  Fitch and Capital Intelligence rate CBK as well - and both have downgraded the bank earlier.   If distress continues, they are likely to do so again. And this leaves CBK then in the distinguished company of Dubai Inc.  Perhaps, not exactly the sort they should be palling around with at present.

HSBC: “No Provision Relief for Kuwaiti Banks Until 2012”

AlQabas published a summary of a recent HSBC research report in its Sunday issue.

Here's a quick summary of the main points:

1. HSBC notes the dramatic growth in distressed loans at Kuwaiti banks – from 5.3% in 2008 to 9.7% in 2009. 
2. And predicts that the banks will continue to make substantial provisions this year and next only reaching a normal level of provisions in 2012. 
3. That being said, there should be a recovery in ROE for 2010.
4. Banks in Abu Dhabi and Kuwait were the worst affected among GCC banks. However, Kuwait has average provisions equal to 10% of total loans while Abu Dhabi only 4%. 
5. A concentration on loans to real estate, construction, and investment companies is responsible for the decline in the value of Kuwaiti bank assets. 
6. Real estate exposure:  Given the absence of Kuwaiti government spending on infrastructure or development projects during the boom years (2005-2008) credit was to the private sector largely to individuals and unlisted companies. The focus was on commercial, residential and investment real estate. Listed real estate companies only account for 13% of the total of such loans. 
7. Investment firm exposure:  Loans to investment companies were KD2.8 billion with KD1.2 billion to conventional firms and KD1.5 billion to "Islamic" firms.  The loans granted were largely used to fund investments in real estate and regional stock markets (thus increasing the lenders' total exposure to these sectors). 85% of investment companies' assets are in the GCC as per the IMF. Since the crisis hit, banks have seen their loan security drop by at least 50% as per HSBC's estimates, though it does note that in the absence of transparency the true impact is not known. 
8. Consumer loans:  These extensions of credit are believed to be of better quality because  they are secured by rentals and salaries. HSBC notes that most Kuwaitis are employed by the Government, the implicit presumption being that their incomes are secure.
   

There were two interesting tables accompanying the article, which I've reproduced below.

First, Kuwaiti bank exposure to real estate as a percentage of shareholders' equity.

Amounts in KD millions.

Bank	Real Estate & Construction ("REE")	Shareholders Equity	REE % of Equity
NBK	1,450	1,871	78%
CBK	733	440	167%
Burgan	976	422	232%
KFH	1,591	1,537	194%
Gulf	1,495	391	382%

Second, Kuwaiti bank exposure to investment companies.

Amounts in KD millions.

Bank	Exposure	% of Total	Shareholders' Equity	Exposure as % of Equity
Gulf	486	18%	391	80%
Burgan	190	7%	422	45%
CBK	269	10%	440	61%
NBK	216	5%	1,871	12%
KFH	944	34%	1,537	61%
Others	658	26%	----	----
Total	2,763	100%	----	----

 

From the above one can draw some conclusions on relative business models and underwriting standards.  

Of course without knowing the details of the loans and in particular the security obtained, these can be only preliminary. 


As usual, the pattern seems to be repeating itself.  One bank is distinguished by its prudence.  And some of the same names seem to be pushing the envelope. 

Al Ahli Bank of Kuwait v AlSanea & Saad Trading - NY Case Dismissed Forum Non Conveniens

A Rather Inconvenient Place After All

Judge Richard Love III of the Supreme Court of the State of New York decided last July that New York was indeed a forum non conveniens and so dismissed ABK's suit against Mr. Al Sanea and Saad Trading, Contracting and Financial Services Company.

(In case you're wondering why the delayed posting, while the judgment was electronically filed 11 August, I didn't get an email until today).

I suspect the new venue will turn out to be much much more convenient for Mr. Al Sanea.  Under AA's law of the conversation of legal energy, that may make it much much less convenient for ABK.  Such is life.

You can find the judgment as Document #28 at the NY Supreme Court's website under Case # 602487/2009.

If you use the tag "Al Ahli Bank of Kuwait" you will find earlier posts on this topic.

Al Safat Investment Kuwait - More Detail on 1H10 KD1.1 Million Loss

Additional detail on ASIK's 1H10 financial performance via an article in Al Watan quoting ASIK's Vice Chairman Mohammad Ali Al Naqi.

While the Company did indeed have KD4 million in profit on the sale by one of its subsidiaries of an investment (in the PRC), this was overwhelmed by mark to markets on Kuwaiti shares.  The VC noted the significant decline on the KSE in 2Q10 as well as KD2.48 million of precautionary provisions on   أرصدة مدينة  .

I'm translating these as "debit balances" and presume they relate to receivables of some sort as opposed to investments.   And I'd certainly welcome any comments from readers who either would like to confirm or amend that translation.

Earlier post on ASIK's 2010 performance here.

The Investment Dar - Dubai Creditor Meeting

TID held a creditors' meeting in Dubai 21 September.  Both Al Watan and Al Qabas have accounts.

The Al Watan (Taamir Hamaad) article is fairly bland - no fireworks.  Adnan Al Musallam  is quoted as reiterating TID's firm desire to repay its debts, adding that the reality of the financial crisis made it incumbent  on everyone the obligation to work together to reach the restructuring.   

He also proposed the formation of a holding company capitalized at between KD300 million to KD400 million - to be administered by the banks and investors - as the vehicle to settle TID's debts.  The rationale appears to be to ensure compliance with the Central Bank of Kuwait's new rules on investment companies.  Apparently to shift the debts off TID's balance sheet along with the assets - thus  improving TID's performance under the CBK's  three ratio tests.  He said that he had requested the executive and legal management of the Company to study this matter.

On the other hand Al Qabas (Mohammad Sha'baan) has a more fiery story (not unexpected) of creditor "anger".  In the Al Qabas version, some creditors are on the verge of a confrontation with TID and its Board over the following:

1. A belief that parties outside the formal management/Board structure of TID are really making the decisions
2. That the Company is deliberately stalling progress
3. That the creditors have been overly patient during the past two years but have gotten nothing from the Company
4. Board Members are deliberately missing meetings with creditors and provoking confrontations in order to evade responding to creditor requests.  A central point is the creditors' demand that they be kept fully in the picture as to what is going on at TID, including efforts to comply with the Central Bank's new regulations for investment companies
5. That some creditors are prepared to bring legal action against all parties - including against the Creditors' Coordinating Committee,  if there is an attempt to impose the restructuring plan without 100% creditor acceptance or acceptance by an absolute majority of creditors.   AA:  This is a puzzling statement.  It's pretty clear by now that all creditors are not going to accept the plan.  And equally that the whole point of recourse to the FSL is to cram down dissident creditors.  Al Qabas' informed sources may be less informed than they claim.
6. That TID has apparently stopped its program of salary reduction for senior management and that the salary scale has reverted to what it was in the boom years.  AA:  This is similar to the earlier theme about creditor anger over a raise and bonus for a member of senior management.  A neat way of attempting to finesse this is to eliminate a reduction and say that technically the fellow is not getting a raise but rather his salary is being restored to what it was prior to the reduction.  Unclear if this is what is going on. 
7. That some Board Members through related companies they control, companies which are partners with TID in certain assets, are gaming the realization of assets.  AA:  This is the fundamental creditor fear - that asset disposals will be gamed to reduce the banks' realization proceeds.  Not an unreasonable fear in the land of egregious related party transactions.

Two quite different accounts, though it should be noted that Al Qabas is speaking about creditor discontent which might manifest itself in the future not battles raging at present.

There's a creditors meeting today in Kuwait for those creditors who missed Dubai.  Hopefully, more detail will be forthcoming.

It's no surprise that creditors' patience is wearing thin.  It's been over two years.  The Central Bank is still reviewing whether to allow TID to use the FSL as cover for its rescheduling.  TID has yet to release any 2009 financials - either quarterly or fiscal year 2009.

Al Safat Investment Kuwait: 1H10 Loss KD1.1 Million

Al Safat Investment issued its 1H10 financials on the KSE today (as usual Arabic only text which is below).

The headlines:

1. A loss for the 1H10 of KD1.1 million and for 2Q10 a loss of KD2.3 million.
2. Comparable figures for 2009 were KD0.05 million for 1H09 and a profit of KD2.0 million for 2Q09.
3. Shareholders' equity stood at KD109 million versus KD136.5 million a year earlier.
4. Current Assets KD56.9 million
5. Total Assets KD177.1 million
6. Current Liabilities KD56.6 million (Positive working capital!)
7. Total Liabilities of KD67.9 million.
8. Total Equity of KD109 million.
9. Don't have an explanation for the KD154,300 difference between Total Assets and Total Liabilities plus Total Equity.  Treasury Shares?

What's interesting is that earlier ASIK had announced  that one of its subsidiaries had concluded a successful exit from a holding in the PRC which would give a profit of KD4.25 million  which would be reflected in ASIK's 2Q10 results.  That suggests that there were total expenses of at least KD6.55 million in 2Q10, assuming no other revenue. Mark-to-markets or provisions, pehaps? 

[9:8:50]  بلغت (خسارة) (الصفاة) (1) مليون د.ك لل6 أشهر المنتهية في 30-06-2010‏
يعلن سوق الكويت للأوراق المالية أن شركة الصفاة للاستثمار (الصفاة)‏
حصلت على موافقة بنك الكويت المركزي على بياناتها المالية المرحلية للفترة ‏
المنتهية في 30-06-2010، يوم الخميس الموافق 16-09-2010 ،
وفقا لما يلي:‏
البند     ال3 أشهر المنتهية في 30-06-10     ال6 أشهر المنتهية في 30-06-10‏
الربح (خسارة)(د.ك)           (2.283.982)               (1.052.962) ‏
ربحية(خسارة)السهم (فلس كويتي) (2.95)                       (1.36) ‏
اجمالي الموجودات المتداولة                                56.860.414‏
اجمالي الموجودات                                          177.095.485‏
اجمالي المطلوبات المتداولة                                 56.566.959‏
اجمالي المطلوبات                                           67.979.802‏
ِ اجمالي حقوق المساهمين                                   108.961.399‏
بلغ اجمالي الايرادات من التعاملات مع الاطراف ذات الصلة مبلغ 342.017 د.ك
بلغ اجمالي المصروفات من التعاملات مع الاطراف ذات الصلة مبلغ 162.545 د.ك
الفترات المقارنة:‏
البند     ال3 أشهر المنتهية في 30-06-09     ال6 أشهر المنتهية في 30-06-09‏
الربح (خسارة)(د.ك)            2.008.551                    49.797 ‏
ربحية(خسارة)السهم (فلس كويتي)  2.60                          0.06‏
اجمالي الموجودات المتداولة                                66.093.906‏
اجمالي الموجودات                                          210.284.340‏
اجمالي المطلوبات المتداولة                                 38.250.324‏
اجمالي المطلوبات                                           73.726.219‏
ِ اجمالي حقوق المساهمين                                   136.532.947‏
وعليه سوف تعاد الشركة الى التداول بعد عشر دقائق من نزول الاعلان .‏

International Investment Group - Denies "Success" in Repaying Debts

This morning IIG announced on the KSE and BSE that the news in this morning's Al Watan about it successfully paying some US$18 million in debt was in error.

It seems success is not only fleeting, but sometimes it doesn't occur at all.

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) ‏

All in the Family: UGB to Seek Central Bank of Kuwait Permission for Additional Three Months to Buy Burgan Bank Shares

(Readers are invited to select the photo they believe 
most appropriate in the context of this news item.)

You'll recall that motivated by impeccable almost geometric logic, UGB had decided earlier that it was a wise investment indeed to acquire a large chunk of Burgan Bank's shares. (Additional posts can be accessed using the tag "UGB").

UGB had obtained Central Bank of Kuwait approval which expired  4 September. It now reportedly will seek a three month extension as we learn from Al Watan citing informed sources.

To help the two parties consummate this "marriage", KIPCO will manage the contract which could include it kindly selling some of its own shares to UGB or "collecting" shares (presumably from the market).

There are no values like family values. 

Union of Kuwaiti Investment Companies Studies the Constitutionality of New Capital Markets Law

AlQabas reports that the Union of Kuwaiti Investment Companies has been studying the new Capital Markets Authority Law as part of their self-proclaimed selfless desire to participate in all aspects of the economy and decisions relating thereto.  

As a result of these efforts, they've discovered some shortcomings it seems and have rather patriotically pointed these out to the authorities.   Further careful study has uncovered some articles which are clearly unconstitutional and,  as well, probably run counter to the original intent of the Founders.  By what I suppose might be described as sheer coincidence, the offending articles relate to penalties applicable to Kuwaiti investment companies.

Appropriate action will be no doubt be taken. 

Gulf Bank to De-Emphasize Investments and Focus on Core Banking Business

Issa Abdul Salaam at Al Qabas quotes informed sources that Gulf Bank is exiting several funds and reducing its share in others during the rest of the year.

GB reportedly withdrew from one fund it had invested in the "past months" with a view to realizing profits in 3Q and 4Q this year and that it intends to exit from several foreign funds.

This represents a change in strategy from that approved by the previous board.  The new board's strategy calls for the bank to focus on its core (banking) business.

Three comments:

1. Sticking to one's core competence is a sensible strategy.
2. Many a change in strategy is motivated more by the need for cash than  long range planning.  The number of lines of business that suddenly become "non core"  are in direct proportion to the cashflow deficit.  Gulf Bank certainly has some serious challenges in its loan portfolio.
3. When picking the "core" business to focus on, it's good to pick one that one has a future.  Whenever I read PR from some firm announcing that it  has made a strategic decision to focus on its core business, I wonder why it wasn't in the first place.  I also recall two business school cases.  In the first,  Pan American Airlines, the company divested itself of Intercontinental Hotels to focus on its airline franchise.  By contrast, in the second, Greyhound/Dial Corp, the dogs were (largely) sold.  One positive thing in this case, the core commercial banking business is a protected one in Kuwait.  And there's probably more of a long range future in commercial banking in Kuwait, if one can get credit underwriting right.

Abyaar Real Estate to Sign Debt Agreement After Eid

Al Watan reports that Abyaar is expected to sign a debt settlement agreement with a major firm after the Eid Holiday. 

The article notes that the company is focused on meeting its obligations as well as completing its real estate projects.  Noting that despite the difficulties in 2009, the Company was able to settle 20% of its liabilities.  While Al Watan doesn't mention it, I'd note that the paydown of the liabilities occurred in close proximity to the Company's successful share issue of some KD52 or so million in September 2009.  That of course was no mean feat given the state of markets.  And Abyaar also increased its capital in 2008 if I'm not mistaken.

The article also notes that Abyaar has just about completed a 40 storey tower in Dubai.  Also that the prudent provisions it has taken against its real estate portfolio will enhance earnings going forward, i.e., the carrying base of assets has been lowered so profit will be higher.  This is  of course just the temporal shifting of profits (or losses) from one accounting period to another and doesn't represent an overall gain in profit for the Company.

ARE started off as a JV between Aayan Leasing and Investment and the AlRashdan Group.   After listing, they each hold about 17% or so of the Company.  There aren't any other disclosed major shareholders.

ARE is listed on the KSE (Symbol 432) and trades at KD26 fils per share a substantial discount from its KD100 fils par value.

Public Prosecutor Stays Gulf Bank Case Against Derivatives Client

Citing parties close to the case, Al Qabas reports (or at least I think so) that the Public Prosecutor has stayed Gulf Bank's case against its client responsible for the derivatives debacle in 2008 (when GB lost some KD359.5 mm leading to the surgical removal of its board and elements of senior management along with the KIA taking a significant stake to top up the needed capital restoration).

I say I think so because I'm not quite sure that my translation of " النيابة العامة حفظت القضية المرفوعة من قبل بنك الخليج "  is correct.  Sadly, AA didn't graduate from KU's Faculty of Law.

Anyone out there who can confirm or correct my translation, please post.

Kuwait Stock Exchange Suspends 5 Additional Companies for Failure to Pay Listing Fees

The KSE announced that it had suspended seven companies from trading due to failure to pay 2010-2011 listing fees.  Two of the companies, Shabka and Safat Global, were already suspended for failure to pay the previous year's listing fee.

While financial distress is not the only reason why a Company might not pay the fee, it's a pretty safe bet that most of the companies on the list did not pay for that reason.  Six of them  them have already been suspended for failure to provide financial reports.  Some for quite extended periods.  For those previously suspended, I've highlighted the word  "موقوفة " in blue.

The companies are (listed in the same order as the Arabic):

1. International Investment Group
2. Gulf Invest  aka Gulfinvest International
3. Pearl (Lu'lu) Real Estate
4. Safat Global
5. Mushrif Trading and Contracting (the only company on the list not suspended for failure to provide financials)
6. Al-Abraj Holding
7. Shabka Holding

 

[10:26:55]  ِ.إيقاف شركات عن التداول لعدم تسديد رسوم الاشتراك السنوي ‏
يعلن سوق الكويت للأوراق المالية بأنه تم إيقاف تداول الشركات
التالية لعدم تسديد رسوم الاشتراك السنوي لعام 2010- 2011 ‏
اعتباراً من اليوم 1-09-2010:- ‏
ِ1- المجموعة الدولية للاستثمار ‏(المجموعة د)(موقوفة) ‏
ِ2- الشركة الخليجية الدولية للاستثمار ‏(غلف انفست)(موقوفة) ‏
ِ3- شركة لؤلؤة الكويت العقارية ‏(لؤلؤة)(موقوفة) ‏
ِ4- شركة الصفاة العالمية القابضة ‏(صفاة عالمي) (موقوفة) ‏
ِ5- شركة مشرف للتجارة والمقاولات ‏(مشرف) ‏
ِ6- شركة الابراج القابضة ‏(الابراج)(موقوفة) ‏
ِ7- شركة الشبكة القابضة ‏(الشبكة)(موقوفة) ‏
علما بان اخر موعد للسداد هو 31-08-2010 .‏
علما بان اخر موعد للسداد هو 31-08-2010 .‏

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.

Aref Investment Company - 1H10 Losses of KD21.4 Million

Aref Investment Group reported its 1H10 financial results on the KSE this morning.  As usual, the announcement is in Arabic only (text below).  With the provision of this report, the KSE will allow the resumption of trading of AIG's shares.

1H10 losses KD21.4 million versus KD38million for the comparable period the year before.  The KD206 million amount for shareholders' equity includes minority interests of some KD37 or so million.

As I've noted before KFH owns some 53% of AIG and is providing support to weather the current crisis.  Earlier posts can be accessed using the tag "Aref".

[10:27:46]  بلغت (خسارة)(عارف) (21.4) مليون د.ك لل6 أشهر المنتهية في 30-06-2010‏
يعلن سوق الكويت للأوراق المالية أن شركة عارف الاستثمارية (عارف)‏
حصلت على موافقة بنك الكويت المركزي على بياناتها المالية المرحلية للفترة ‏
المنتهية في 30-06-2010، يوم الاثنين الموافق 30-08-2010 ،
وفقا لما يلي:‏
البند     ال3 أشهر المنتهية في 30-06-10     ال6 أشهر المنتهية في 30-06-10‏
الربح (خسارة)(د.ك)             (16.954.474)            (21.418.959) ‏
ربحية(خسارة)السهم (فلس كويتي)     (16)                         (20) ‏
اجمالي الموجودات المتداولة                                   299.743.103‏
اجمالي الموجودات                                            661.056.688‏
اجمالي المطلوبات المتداولة                                   392.279.750‏
اجمالي المطلوبات                                             452.963.950‏
ِ اجمالي حقوق المساهمين                                     208.092.738‏
بلغ اجمالي الايرادات من التعاملات مع الاطراف ذات الصلة مبلغ 680.466 د.ك
بلغ اجمالي المصروفات من التعاملات مع الاطراف ذات الصلة مبلغ 7.859.169 د.ك
الفترات المقارنة:‏
البند     ال3 أشهر المنتهية في 30-06-09     ال6 أشهر المنتهية في 30-06-09‏
الربح (خسارة)(د.ك)            (20.470.712)           (38.020.436)‏
ربحية(خسارة)السهم (فلس كويتي)     (19)                       (36)‏
اجمالي الموجودات المتداولة                                  311.066.999‏
اجمالي الموجودات                                           657.443.445‏
اجمالي المطلوبات المتداولة                                  333.757.640‏
اجمالي المطلوبات                                            450.767.484‏
ِ اجمالي حقوق المساهمين                                    206.675.961‏
وعليه سوف تعاد الشركة الى التداول اليون الثلاثاء الموافق 31-08-2010‏