The Investment Dar - Restructuring Update: Moving Forward Toward Implementation

Quoting informed sources "close" the Creditors' Co-ordinating Committee ("CCC"), AlQabas reports that the advisors to the CCC will finish drafting the documents and all preparatory steps to begin implementing the restructuring just before the end of the coming week. And that these will be discussed with the Company in the weekly scheduled session Thursday.  Then implementing regulations to the restructuring plan will be submitted to the Shari'ah boards of TID and the CCC's advisors, Morgan Stanley as well as to Ernst and Young who the Central Bank engaged to review the Plan as required under the Financial Stability Law.  The article notes that the Plan will be submitted at a later stage to the Court for final approval and that this may help in getting final approval for the Plan leading to its implementation under the FSL.

AlQabas also notes that the CCC and TID have been discussing the Company's five year budget/financial plan (the period of the restructuring) and the details of repayment of the debts which is expected to begin this September once the Court approves the Plan and the Central Bank gives the "green light".  The article ends by noting the complicated and thorny condition of TID.

The Investment Dar - Restructuring Update

23 May Update:  Here's the link to TID's English press release.  You can check my translation.

AlWatan has an article based on a press release from TID giving an update on its restructuring.

Here are the main points:

1. TID has reached agreement with the advisors and the Creditors Co-Ordinating Committee ("CCC") on all of the commercial aspects of required legal documentation necessary to begin the implementation of the restructuring.
2. The draft documents are currently being translated into Arabic so they can be presented to TID's Shari'ah Board and that of Morgan Stanley (the advisor of the CCC) as well as for the Shari'ah Board of the creditors.
3. It's also expected that the documents will be submitted to the Kuwaiti Court as a way of speeding up the implementation of the restructuring.
4. Ernst and Young appointed by the Central Bank will submit its opinion on the restructuring to the Court.  As you'll recall from earlier posts, the FSL requires that the Central Bank appoint an independent consultant to review the proposed restructuring plan.  That consultant's report is then used as the basis for its (the CB's) recommendation to the special FSL Court whether to accept the Plan as proposed, reject it, or modify it.
5. Under the Restructuring, TID is required to prepare a five year business plan and budget.  It is currently putting the finishing touches on same and will present it to the CCC in Dubai on 24 May.
6. Then Mr. AlMusallam is quoted about the unceasing work being expended by TID, its wonderful co-operative working relationship with the members of the CCC, that more than 80% of creditors and investors had accepted the Plan, and finally that the Plan was the best way for creditors to secure repayment and for all parties - creditors, shareholders and TID itself.

The Investment Dar – Review of 2008 Financials

Further to my earlier post, in which I discussed primarily the auditors' report on TID's financials, here are some additional comments.

Treasury Shares

The Consolidated Statement of Changes in Equity and Note 18 (Page 30) shows that TID and its associates owned 60,708,612 in Treasury Shares with a cost of KD45.224 million and a market value of KD6.192 million (13.7% of cost!). 

This is significantly larger than the holdings disclosed in TID's 3Q08 financials of KD9.820 million or 14,097,720 shares. 

Two reasons for the change. 

1. First, the inclusion of holdings of associates. 
2. Second, some minor 4Q08 buying by TID itself. 

Of the two, the associates' holdings were the most important factor. 

1. As at 31 December 2007, they held 35,019,092 shares at a cost of KD21.630 million and at 31 December 2008, 45,135,892 shares at a cost of KD34.993 million. 
2. As of the end of 2008, TID itself held "only" 15,572,720 shares.
   

Let's take a look at trading activity. Unfortunately, TID has not restated its interim financial reports for 2008 so we cannot determine quarterly trading patterns for the associates. 

1. In 4Q08 TID purchased net KD0.411 million. And for the entire year actually sold some KD1.2 million worth of Treasury Shares.  
2. For all of 2008, TID's associates purchased 10,296,800 shares for KD13.363 million. That would mean an average purchase price of KD1.321 per share. When I look at the KSE records for 2008, it seems that March 16 and 17 are the only two trading days with a price of KD1.320 when some 12 million or so shares traded.

Assuming that TID's associates bought their 2008 shares at market and looking at TID's own trading position, it seems there were no significant 4Q08 share transactions by the Group to influence its price – a time when one might have expected an effort to prop up the market value. 

Notable high volume days were 25, 26, and 27 November when 31.4 million, 14.4 million and 15.2 million shares traded roughly in the KD0.220 range. And then again on 17 December when 31.4 million shares traded at KD0.203. And finally on 23 December when 42.3 million shares traded at KD0.157.

Investments at Fair Value through Profit or Loss

In Note 5, Page 19 we learn that "Unquoted local funds with a fair value of KD55,575,647 as of 31 December 2008 (200&7: KD60,710,023) are in funds managed by the Group. Approximately, 52% of the assets of these funds of KD65,287,835 are held by the Group under Murabaha and Wakala payables."

Murabaha and Wakala Placements

Note 7 Page 20. A couple of points here. 

First, as you'll see M&WP with non financial institutions jumped from KD12.7 million in 2007 (7.3% of all M&WP) to KD43.3 million in 2008 (37.6%). From the Note these do not appear to be with related parties. However, TID has some KD51.2 million placed with a related party as of FYE2008. 

We also learn that as of 31 December 2008, it did not hold any collateral on these placements but subsequently acquired KD33.9 million of collateral (exact nature unspecified). 

KD51.2 million represents 44.4% of M&WP which seems a "bit" excessive in terms of risk concentration, especially since collateral seems to have been an afterthought. This amount is roughly 25.4% of FYE08 equity, though year end equity has been depressed by losses and fair value declines so it may be fairer to look at 30 September 2008 equity when the ratio was 11.3%. This analysis assumes of course that TID had no other exposure to this same related counterparty.

Financing Receivables

Note 8 Page 21. TID advises that subsequent to 31 December 2008, it acquired 8.7% of the equity in Bahrain Islamic Bank (an associated company) as settlement of a finance receivable of KD21,237,253. The market value of the shares was KD12,256,833. 

Somehow TID determined that it should recognize KD10,706,237 in goodwill on the transaction. 

And somehow TID's auditors signed off on this. When AA learned his accounting, a transaction was valued by the "boot" received. When there was a market price, that was the "boot" (value). So it's unclear what the basis was for recognizing this rather substantial amount of goodwill.  I guess it's a stark lesson of the need to stay current.  Back to the books for AA!

Investment Properties

Note 10 Page 22. TID advises the subsequent to 31 December 2008, it settled an outstanding Murabaha of KD16,763,386 by transferring property worth KD15,797,730. As a result it recognized a profit of KD965,656 on the transaction! The identity of the "wise" lender in this exchange was not disclosed. Perhaps, the "discount" was the price of an early exit and an excuse from the restructuring. It's unclear how the property was valued.

Investments in Associates

Note 12 Pages 23 -26.

Stehwaz Holding and Rehal Logistics

Page 23. During the year, TID reclassified investments in Rehal Logistics and Stehwaz Holding from investments available for sale to investments in associates where it could use the equity method of accounting instead of the previously used fair value (market price in this case). This reclassification magically created provision goodwill of some KD73.5 million which TID notes it wrote down to KD23.0 million. You may recall from an earlier post of mine that 47 shareholders in Stehwaz had raised some serious charges against TID and the management/board of Stehwaz.  Related to, if I remember  correctly, allegations of manipulation of fair values.  Allegations I'd hasten to note are not judicially proven. Also if I haven't mentioned it before Mr. AlRabah - the peripatetic director at Commercial Bank of Kuwait elected in what was portrayed at the time as a successful campaign to enhance corporate governance was Chairman at Stehwaz during this period.

Boubyan Bank Shares

Page 24. The Note also contains TID's side of the Boubyan Bank share dispute with Commercial Bank of Kuwait. 

Let's let TID speak for itself here.

"The Group's investment in Boubyan Bank (KSC) was transferred to a local bank under a repurchase agreement as part of an agreement with that bank to act as an advisor for restructuring of the Group's debts. The Group revoked the repo agreement when the local bank terminates the advisory agreement. However, the bank did not transfer title of these shares back to the Group but set off its value of KD94,103,965 against amounts due from the Parent Company of KD74,616,098 which is included in Murabaha and Wakala Payables as of 31 December 2008. The Group is pursuing legal action for recovering ownership of these equity shares. The Group carries the investment at its adjusted acquisition cost under equity method of accounting. The fair value of this investment as of 31 December 2008 was KD88,311,406. Subsequently, the Group ceased to have significant influence over Boubyan Bank since it is no longer represented on its Board of Directors when it was reconstituted in April 2009, and has reclassified it as investment available for sale from that date. On 16 June 2009 the court issued a verdict to suspend dealing on those shares temporarily, pending a ruling on the dispute."

This particular disclosure is intriguing, though its wording is obscure. My understanding was that that repo was a new transaction. In 4Q08 CBK bought the shares and gave TID some US$250 million. TID was supposed to buy the shares back in early 2009. On that basis, it's unclear to me how this transaction is related to the restructuring assignment. TID could retrieve the shares (at least theoretically) by giving CBK the cash on maturity. It did not. To be fair, it could not due to lack of funds. 

One other potential reading of this paragraph is that TID gave the shares to CBK in a non cash transaction. That is, it made CBK a secured creditor so it would lead the restructuring. That would seem to be what I'd call a preference (though careful readers aware from my above comment that I lack familiarity with the intricacies of Kuwaiti accounting standards may have drawn a similar conclusion about my knowledge of Kuwaiti laws).   Since this has not mentioned in anything I've seen, I am discounting this second explanation and not as TID did using a 3% perpetual growth rate in my valuation.

Taking the relative share prices of BB at 31 December 2008 of KD0.400 per share and the current price of KD0.540, the shares should be worth roughly KD127 million. If we assume CBK and TID settle for CBK's principal plus additional interest since the setoff, TID should get roughly KD49 million or so in return.

Prodrive

Page 24. During 2008, TID exercised an option to acquire 40% of Prodrive for KD11.2 million of which KD7.1 million is payable and the remaining KD4.1 million is a liability. TID has provisionally recognized some KD8.7 million in goodwill on the transaction. It's unclear what the timing is for TID's payment of these amounts is. Presumably, failure to pay might affect its ownership rights or the acquisition price.

Various "Investment Properties"

Page 25. Again another quote from TID. 

"The underlying assets of certain associates carried at KD237,502,699 in these consolidated financial statements are investment properties in Bahrain and Dubai carried at fair value. The Group's share in associates' results, includes gains on revaluation of these investment properties of KD60,657,096 based on the average of the range of values of independent valuation experts. Subsequent to the balance sheet date, these associates have reported a significant decline in the carrying value of these investment properties. Consequently, the carrying value of the investment in these associates has declined by KD60,622,492 as of 30 September 2009. The associates have not yet determined the impact of change in market values after that date and up to the date of these financial statements."

Impairment Testing

TID has recognized some KD61,560,335 for impairment in associates. It is unclear to me if this amount includes the KD60.6 million related to Various Investment Properties referred to above. Or whether it is before this number? Meaning that additional fair value decreases may be required.

Murabaha and Wakala Payables

Note 16 Page 28-29. This note is interesting for what it tells us about The Investment Dar Bank Bahrain (in which TID has roughly 79% shareholding and so therefore effective control). It seems TIDBB placed some KD253 million with TID on an unsecured basis. This seems a rather large amount / risk concentration by TIDBB with TID. 

Earlier press reports suggest to me (but don't prove) that some of these funds may have been customer investment accounts – in effect Islamic "trust" accounts either RIA (Restricted Investment Accounts where the client designates the investment) or URIA (Unrestricted Investment Account the client does not).

If I'm not mistaken the Central Bank of Bahrain amended one of its regulations for Islamic Banks to limit exposure to a single counterparty of the Islamic Banks own funds, RIA and URIA to 35% of regulatory capital. Often (but not always) when a Central Bank amends a regulation it is dealing with a problem that has occurred. No way to know for sure here. Post hoc does not necessarily mean propter hoc.

Final Comments

After reading TID's 2008 financials, I have some questions about he valuation of  some assets. As later financials are released, this topic will hopefully become clearer.

The Investment Dar - Commercial Bank of Kuwait - Boubyan Bank

AlQabas has a report that Jamal AlMutawa, the former GM of CBK, was in the bank to assist with negotiations with TID (being run as per the article by TID's Chief Restructuring Officer) to solve the dispute over the BB shares.  Jamal was "in charge" when CBK and TID agreed the repurchase transaction in 4Q08 which led to CBK asserting final ownership of the shares when TID failed to repurchase them in 2009.  So presumably he's there to share what he knows about the genesis of the original deal and what promises and understandings both parties had at the time.

Reportedly the deal will preserve the rights of CBK to its money - this in effect sounds like the transaction is being treated as a secured loan rather than a sale/repurchase transaction.  Presumably, CBK not only wants it principal plus interest back - but as well to be excused from the restructuring.    The CRO, Mike Grant, is quoted as saying that any excess after CBK is paid its dues will accrue to TID.

The rest of the article deals with the resignation of Mr. AlRabah as Chairman of CBK and speculation that a ordinary general meeting of shareholders may be called if the call to a reserve director is unsuccessful.

The Investment Dar - Financial Stability Law - Central Bank Appoints Ernst and Young

AlQabas reports that it has learned that the Central Bank of Kuwait has appointed Ernst and Young as consultant to study TID's financials.  E&Y is said to have received the formal engagement letter yesterday (4 May).

As you'll recall from the earlier discussion of the Financial Stability Law, there are several steps in the process.

Once the special FSL Court has received the completed application from an investment company to enter under the FSL, the Court issues an immediate but temporary stay.  After interested parties receive formal notice of this action from the Court, they are given time to file any objections as to why the Court should not continue with the FSL process (which ultimately may result in the cramdown of dissident creditors through the staying of all legal cases).

At the end of this period and if there have been no objections or the Court did not find any of them compelling, it issues another notice and refers the debtor's case to the Central Bank of Kuwait.

That's the point we're at now.  The relevant chapter and verse from the FSL is Part 3 Article 19.   The CBK is to study the debtor's financials and determine whether a restructuring makes sense.  In other words can the company be saved?  If not, the company should be liquidated.  It then also evaluates the proposed restructuring plan to determine if it is  fair as well as sufficient to allow the company to continue as a going concern.  The CBK has four months to submit its report, though t is allowed an additional four months if required.  It's very important to note that the FSL gives the CBK the power to amend the restructuring plan if the CBK believes changes are required.

AlQ also mentions that next week TID's and the Creditors Co-Ordinating Committee's lawyers will meet in Dubai in a small working meeting to discuss certain (undescribed) details of the restructuring plan that they were unable to cover in the last meeting.

The article also notes that various courts have delayed hearing open cases and appeals related to TID until 17 and 24 May.  Technically these are not finally stayed until the FSL Court issues its final acceptance of the plan - which will follow the Central Bank of Kuwait's report.  The courts are  therefore going to keep these cases "live" but "napping" until the FSL Court issues its final ruling.  That way, if by some chance the FSL Court rules against TID's request,  the courts can proceed with these cases.

The Investment Dar - Analysis of 2008 Financials - Auditors' Report

Earlier today TID released its 2008 financials on NasdaqDubai (in connection with TID's Sukuk).  Apparently, it's not yet had the opportunity to release them on its website.  Nor do they appear yet on the KSE website, but then again it does take quite a bit of work to accomplish a task like this.

Let's start with the audit report - which should be the careful investor's first stop in reading any financial report.

There are a couple of new bits of news here - previously not reported:

1. A change in auditors - or at least one of them.  PwC has exited.
2. A report of a material violation of Central Bank of Kuwait exposure limits in (you guessed it) a related party transaction.

First the change of auditors. While KPMG is still engaged, Deloitte now appears in place of PricewaterhouseCoopers.  (By Kuwait regulations a Kuwaiti company must engage two auditing firms).  No reason given why PwC left.  Unclear whether they excused themselves or were excused.  I'm guessing the former for both risk management reasons (not just here but related to other troubled auditing clients) as well perhaps disagreements over the application of some accounting principles. I'm sure that all of these are theoretically in line with the letter of IFRS,  though I suspect they may have been a bit aggressive for PwC's taste.  Having said that I'd acknowledge that I tend to be a bit "high church" on this topic so I may be projecting my own feelings onto PwC.  See the comments section for some discussion of the shuffling of local partners among PwC, E&Y, and Deloitte.  There may be other factors in play here than the ones I mentioned above.

Second, as noted earlier, the auditors have disclaimed an opinion.  That is, they did not express an opinion on the financials.  Their position is based on (a) uncertainty about ability to agree the restructuring and (b) the fate of the Boubyan Bank shares.  If there's an adverse judgment against TID on the latter it could lead to an approximate KD67 million or so loss - a major impact on its KD201 million in shareholders' equity.

On the former - the restructuring - TID's auditors state:  "We have not been able to obtain sufficient, reliable audit evidence to determine whether the Group will be able to reach an agreement to restructure its debt obligations."

What's particularly interesting is they are making this statement not as of 31 December 2008 but as of 13 April 2010 the date they signed their audit report.  A date after the FSL Court had granted  at least initial protection under the FSL to the company.

No doubt, the auditors are being careful.  They can't be 100% sure and so prudence would dictate such an approach. A completely rational response not only given the situation (a restructuring) but also the company's reputation.  

Finally, there is a bit of new news in the last paragraph in the section on legal and other regulatory requirements where the auditors note that they have not become aware of any material violations except relating to Murabaha and Wakala placements with a related party, "which exceeds the credit concentration limit stipulated by the Central Bank of Kuwait" as disclosed in Note 7.   Apparently, not a sufficiently important item to be mentioned in TID's earlier announcement on the KSE of its 2008 summary financial results, where it mentioned the two reasons for the auditors' disclaimer of an opinion.  Sitting here it seems to me that a material violation of a CBK regulation would be a bit of material information that an investor would want to know to enable him to make an informed decision.  

As an aside I'd note there is also an apparent similar issue for The Investment Dar Bank Bahrain which seems to have placed KD253 million with TID as disclosed in Note 16.  While TIDBB's website is no longer password protected, it has no content (though to be fair it has some really nice pictures) so it's a bit difficult to see what percentage this amount represents of its capital.

I'll go out on a limb here and guess well over 25%.

TID's report (Note 2 page 9) informs that TIDBB's auditors have modified  their earlier 2008 audit report to include an "emphasis of matter" item that if TIDBB can't recover the placements with TID it might not be able to continue as a going concern.  Not having seen the original audit report for TIDBB, it's unclear why this sort of eminently reasonable comment wasn't made before, particularly given the rather large "bet" TIDBB had placed on TID.

Comments on the body of the financials will follow.

The Investment Dar - 2008 Financials Released

TID Global Sukuk  released TID's 2008 financials on NasdaqDubai this morning.  I haven't seen them yet on TID's website, but as we all know it can be such a bother transcribing all those numbers and then posting them. A burden made even more difficult by the nature of the numbers to report - a loss.

Once I've taken a look I'll post a comment if anything catches my eye.

Dubai Holdings Commercial Operations Group - Voluntary Suspension of MTN Listing on Nasdaq Dubai

DHOC announced that it was voluntarily suspending its listing due to failure to provide 31 December 2009 financials within the mandated time frame.  It expects to report by 16 May as reported earlier.

NasdaqDubai also announced that it had suspended IIG for failure to provide its 2009 financials as well as the continuing suspension of the following (already suspended) for failure to provide 31 December 2009 financials:

1. TID Sukuk
2. Nakheel 2
3. Nakheel 3

The Investment Dar - FSL Court Waiting for Central Bank of Kuwait Input

AlWatan reports that the Central Bank is expected to give its comments on TID's restructuring plan (though no time frame is discussed in the article).  Once the CBK gives its input and assuming it supports the plan, TID expect that the FSL Court will quickly  issue the final order to implement the plan.

Not a lot of  new "news" in this article.  The real issue here is how long the CBK will take for its review of the plan.  Hopefully, less time than it took to get TID's 2008 financials approved - which by the way have yet to make it on to TID's website.

The Investment Dar - Creditors Press for Movement on Asset Sales

AlQabas has a report on the meeting in Dubai between TID and the Creditors' Co-ordinating Committee this Tuesday.

Here are the key points from the article.

The first topic discussed was the sale of Boubyan Bank shares where the desire is to get the best possible price.  Mike Grant, the Chief Restructuring Officer, is reported to have briefed on a meeting with National Bank of Kuwait in which they evidenced continuing interest in purchasing the shares assuming that TID and Commercial Bank can come to an agreement.  NBK is said to want to purchase at the market price.  The article then mentions that the price should be no less than KD0.600 per share.  BB has been trading at around KD0.540 to KD0.560 the past few days.  So I suppose that's not an unreasonable price. The article notes that the BB shares are outside the asset realization program under TID's restructuring so that they are not pressed to sell them.  NBK is awaiting a formal written response on the potential sale, including the proposed sales price.

The second topic has to do with the sale of assets that are subject to the restructuring.  Nothing has been done until now because of the previous legal cases which frustrated the closing of the restructuring.  Now with TID's entrance under protection from the Financial Stability Law, it's expected apparently that up to eight more months may pass before the restructuring will be finalized.  Since TID has to pay 5% of the principal amount during the first year, the lenders are encouraging the company to develop a clear asset sales plan so that it will be ready to spring into action when legal formalities are completed.  One target is to have foreign assets ready as the expectation is that these will be able to be sold quicker than Kuwaiti assets.

The Company has written expressing its commitment to move forward, but has apparently noted that there might be circumstances outside its control - a decision by the FSL Court or the Central Bank.  No doubt, this message sent more than one shiver down the creditors' spines.  And probably revived some of the previous concerns about management - the sort that motivated creditors to ask the Central  Bank to put a monitor into TID.  TID's letter in this regard has been forwarded to the Creditors' Co-Ordinating Committee's lawyers for study.

The Investment Dar - More on 2008 Financials: No Audit Opinion

TID released a formal announcement on the KSE today (text below, Arabic only) about its fiscal 2008 financials.

The major piece of new "news" was that TID's auditors had not given an audit opinion.  Technically, what they've done is issue a "disclaimer" stating that they were unable to obtain sufficient information in order to render an opinion.

Two reasons cited:

1. TID's ability to function as a going concern depends on the rescheduling and it is unclear whether that will go forward.
2. TID is engaged in a dispute over ownership of shares in a bank listed on the KSE (that's Boubyan Bank) with another Kuwaiti bank (that would be Commercial Bank of Kuwait).  TID's 2008 consolidated financials carry the BB shares at KD142 million while the value of the debt related thereto is KD75 million.   And TID's auditors have been unable to determine if an adjustment to TID's financials is warranted.  

Regarding the latter, in the worst case, if Commercial Bank of Kuwait were to be judged the owner of the BB shares, then TID would have to recognize a loss of some KD67 million (roughly one-third of its 2008 capital of KD201 million).  And of course if TID were judged to be the owner, then there would be no adjustment to its financials.

Of course 2008 is long ago and far away in terms of judging impact.  What will be critical will be the path of asset values since 31 December 2008.

Here's the KSE announcement.

[12:35:19]  ِ.مجلس ادارة (الدار) يوصي بعدم توزيع ارباح عن السنة المنتهية في 31-12-08 ‏
يعلن سوق الكويت للأوراق المالية بان شركة دار الاستثمار ‏
قد حصلت على موافقة بنك الكويت المركزي على بياناتها المالية
للسنة المالية المنتهية في 31-12-2008، بتاريخ 13-04-2010‏
وقد احيط بنك الكويت المركزي علما بمضمون البيانات المالية الختامية المجمعة
للشركة عن السنة المنتهية فى 31-12-2008 الواردة الى بنك الكويت المركزي ‏
وفق كتاب الشركة المؤرخ فى 15-03-2010 ،اخذا بالاعتبار ما ورد فى ‏
تقرير مراقبي الحسابات وكما هو مبين فى الايضاحين (2,16) من ان قدرة ‏
المجموعة على متابعة انشطتها طبقا لمبدأ الاستمرارية تتوقف على اعادة جدولة ‏
شروط التزاماتها مع الدائنين ،وكذلك ما جاء فى تقرير مراقبي الحسابات ‏
بشان "عدم القدرة على ابداء الراي" من انه نظرا لجوهرية الامور ‏
المذكورة بفقرات اساس عدم القدرة على ابداء الراي ،فانهم لا يبدون ‏
رايا على هذه البيانات المالية المجمعة .‏
وفقا لما يلي:‏
ِ1) نتائج أعمال الشركة:‏
البند             السنة المنتهية في 31-12-08   السنة المنتهية في 31-12-07‏
الربح(خسارة)(د.ك)              (80,313,260)        132,037,980 ‏
ربحية(خسارة)السهم(فلس كويتي)   (87,45)               140,58 ‏
اجمالي الموجودات المتداولة     365,796,380       659,501,254 ‏
اجمالي الموجودات              1,200,531,431    1,259,618,796 ‏
اجمالي المطلوبات المتداولة      817,461,744       644,627,427 ‏
اجمالي المطلوبات                999,118,504      871,989,478 ‏
اجمالي حقوق المساهمين         201,412,927       387,629,318 ‏
بلغ اجمالي الايرادات من التعاملات مع الاطراف ذات الصلة مبلغ 8,135,295 د.ك
بلغ اجمالي المصروفات من التعاملات مع الاطراف ذات الصلة مبلغ 4,560,000 د.ك
ِ2-التوزيعات المقترحة :‏
قرر مجلس ادارة الشركة عدم توزيع ارباح عن السنة المالية المنتهية فى ‏
فى 31-12-2008 ،علما بان هذه التوصية تخضع لموافقة الجمعية العمومية ‏
والجهات المختصة .‏
علما بان تقرير مراقب الحسابات يحتوي على اساس عدم القدرة على ابداء الراي:‏
ِ-كما هو مبين في الايضاحين (2.16) من هذه البيانات الماليه المجمعه : بتاريخ
ِ8-10-2008 تخلفت الشركة الام عن سداد تسهيلات وكاله ولاحقا توقفت عن
سداد كل الديون و الارباح المتعلقه بها المستحقه لصالح الدائنين ( البنوك و ‏
المؤسسات الماليه و اخرون ) بعد تاريخ التخلف عن السداد اعلاه : و قد أدى ‏
ذلك التخلف عن السداد الى ان اصبحت الشركة الام متخلفه عن سداد ديونها
وفقا لشروط التخلف عن السداد المنصوص عليها في اتفاقيات الديون الاخري
و بالتالي ادي ذلك الى عجز المجموعه عن الوفاء بإلتزامات ديونها بالكامل .‏
كذلك قام بعض الدائنون برفع قضايا لدى محاكم الكويت متضمنه اشهار افلاس ‏
الشركة الام للحصول على مستحقاتهم بالاضافه لذلك بلغت صافي خسائر ‏
المجموعه 80 مليون د.ك تقريبا عن السنه المنتهيه في 31-21-2008 كما توجد
مخالفه لشروط الاتفاقيات المبرمه مع الممولين مما يقتضى السداد الفورى لتلك
الالتزامات .‏
هذا و تعمل المجموعه حاليا على التفاوض مع الممولين لاعادة هيكله ديونها ,‏
و قد اصبحت قدرة المجموعه على متابعه اعمالها على اساس مبدأ الاستمراريه ‏
تستند بشكل كبير على النجاح في هذه المفاوضات . لم نتمكن من الوصول الى
أدله تدقيق موثوق فيها و كافيه لتحديد مدى قدرة المجموعه على الوصول الى ‏
اتفاق بشأن اعادة هيكلة الديون المستحقه عليها .‏
ِ- كما هو مبين في ايضاح رقم (12) من هذه البيانات الماليه المجمعة , يوجد
نزاع قضائي مع بنك محلى لإسترجاع ملكية المجموعه في بنك كويتي مدرج ‏
في سوق الكويت للأوراق الماليه و مصنف ضمن الاستثمارات في شركات
زميله بقيمة دفتريه بلغت 142 مليون د.ك تقريبا في البيانات الماليه المجمعه ‏
و قد بلغت الوكالات الدائنه المتعلقه بذلك الاستثمار بالبيانات الماليه ‏
المجمعه 75 مليون د.ك تقريبا . لم نتمكن من الحصول على ادلة تدقيق كافيه ‏
و موثوق فيها لتحديد ما اذا كانت هناك اية تسويات قد تكون ضروريه على ‏

البيانات الماليه المجمعه نتيجة لذلك .‏

The Investment Dar Clears Another Hurdle in Its Restructuring

Citing a well connected but unnamed source, AlQabas reports that the Financial Stability Law Court has issued a decision halting all legal cases against TID.  As you'll recall the FSL procedure is that upon the receipt of a request from an investment company (accompanied by all necessary documents), the FSL Court issues a temporary stay and notifies creditors who have a limited time in which to submit their objections.  That step has come to an end with the Court upholding TID's entry under the FSL process.

So while as AlQabas headline says "TID Breathes a Sigh of Relief After the Freezing of Court Cases Against It".  The next step is for the Central Bank to study the proposed restructuring plan and report back to the Court on whether it supports it or not.

I think the CBK will approve the plan.  It's an important step in restoring financial stability to the country.  So if it has a reasonable chance of success, the CBK will probably approve.

As well, a decision by a Kuwaiti Court does not necessarily stay court actions in other jurisdictions unless those jurisdictions are convinced that the proceedings in Kuwait under the FSL are equivalent to their own bankruptcy/insolvency/restructuring regimes.  Again I think other jurisdictions will give Kuwait the benefit of the doubt.

AlQ notes one wrinkle and that is that ("Islamic") murabaha holders had conditioned their acceptance of the restructuring on their being given priority of payment over other creditors given the difference of their position versus other creditors.  Essentially that argument was that they had deposit or trust arrangements as discussed in an earlier post.

The article goes on to note that the recent travel disruptions in Europe had caused the postponement of Creditors Co-ordinating Committee meetings.  The CCC will meet on Monday and then with TID with on  Tuesday.  Venue Dubai.

Topics are the possibility and modality of the accommodation with Commercial Bank of Kuwait regarding the Boubyan Bank shares.  Creditors are reportedly concerned about two things.  First, that time is a factor.  A key concern is that if a fixed price contract is struck, BB shares may decline in value before implementation.  Then the parties interested in buying (note the use of the plural) will decide to pick up the shares in the market rather than pay above market.  Second, the creditors want to discuss getting their cut of the proceeds from any sale. 

Other topics are the role of the CCC in the period while the FSL process moves forward (CBK review, approval, etc). A process expected to take several months. And whether the Chief Restructuring Officer should be given additional duties for the implementation phase.

Previous posts can be accessed using the labels "The Investment Dar" and "Financial Stability Law".

The Investment Dar - 2008 Results English Language Version

Director ([in Japanese, to the interpreter): "The translation is very important, O.K.? The translation."

Interpreter (in Japanese, to the director): "Yes, of course. I understand."

Director (in Japanese, to Bob):  "Mr. Bob. You are sitting quietly in your study. And then there is a bottle of Suntory whisky on top of the table. You understand, right? With wholehearted feeling, slowly, look at the camera, tenderly, and as if you are meeting old friends, say the words. As if you are Bogie in Casablanca, saying, "Here's looking at you, kid," -- Suntory time!"

Interpreter (In English, to Bob): "He wants you to turn, look in camera. O.K.?"

Bob:  "Is that all he said?"

TID released an English language press release on its 2008 performance on NasdaqDubai today.

In  reading  last night's Arabic press release, we at Suq al Mal had been so impressed that we relegated Gulf Finance House and Dr. Esam Janahi to second place behind TID and Mr. AlMusallam for their unbelievable performance.  Post and analysis here.  

In reading today's English version, we're disappointed.  Like the translator's poor effort in the quote above, TID's English language press release has come up a bit short in critical areas.  Frankly, if this sort of effort appeared in Arabic, it wouldn't even qualify for the finals.  The very soul of yesterday's performance has been lost in translation.

Luckily for TID and Mr. Al Musallam, our awards are based on the performance in Arabic.  However,  in the interest of fairness, in light of GFH's good showing in English our  Board  has added another category to Suq Al Mal's Academy Awards for Best Performance in a Private Sector Financial Comedy.  And the winners are!

1. Best Performance:  The Investment Dar starring Adnan Al Musallam
2. Best Foreign Language Performance:  Gulf Finance House starring Dr. Esam Janahi

We'll be holding the formal award ceremony at the Burj Khalifa  later this year.  Timing is currently uncertain pending the resolution of two issues.  

First, the selection process for other awards is proceeding slowly.  Competition  over the 2008 - 2009 period was particularly intense.

With two strong candidates from Saudi Arabia, Suq Al Mal's distinguished panel of judge (AA) is having a hard time coming up with a winner for Best Performance in a Financial Drama.

And how to choose from the equally strong cadre of qualified contestants for Most Embarrassed National Regulator?  If our current plans come to fruition, Alan Greenspan will personally present that award. Right now I'm about 70% sure he'll be there.  And, frankly, it's hard to do better than that.  Just ask the Maestro.

Or Outstanding Kuwaiti Investment Bank of the Year?  And how does one weight the factors?  The size of the loss.  The absolute amount looted from the shareholders.  The refusal to recognize reality.  The most absurd press release.

Best Supporting Performance in a Financial Looting? 

Most Urnrealistically Optimistic Financial Analyst?  Most Fawning Journalist?

And two new categories this year.  Most Absurd Investment.  And  Most Compelling Performance by a Non Core Asset.

And we have the usual awards to recognize overall contributions made to the industry like the Bernie Madoff Lifetime Achievement Award.  The Parmalat Creative Accounting Award.   The Arthur Anderson Professional Accounting Medal.  The Enron Board Corporate Governance Award.

Nominations are still open so send in the names of your favorite candidates by way of a post here.

Second, funding.

An event like this requires spending if it's to be done right.  We'll need to charter an A380. (AA always travels in style when someone else pays).  Then there's the staff accommodations at the Burj AlArab (We'll want suites in the new wing!  Last time I stayed the main flat screen TV didn't work properly.  And the toilet made an awful noise).  The media   -  a live broadcast on MBC or LBC?  Perhaps both?  I definitely want Amr Adeeb as the celebrity host along with Ahmad.  For presenters,  I've already sent a formal request to the authorities in Bahrain and Saudi to ask if they can temporarily lift the travel ban on certain individuals who may be contestants or even presenters.  Or both.  For entertainment - Muhammad Abdo, Fairouz, perhaps Kathem AlSaher.  And since we're an international competition - Britney Spears to lip synch the Kawkab's "AlAtlal" which is the internationally recognized theme song of the pageant. 

You're probably wondering how we'll raise the money.  I've already sent out the RFP to local and international banks for a zero coupon perpetual bond.   And an Islamic tranche - Qard Hassan - for those with a preference for Shari'ah compliant financing. While the structure is designed to eliminate the risk of non payment, I'd note that Shaykh Khalifa has not formally announced that he isn't standing behind this security.  So there is a guarantee of sorts as well on the transaction.  And an automatic entry for the successful lender in next year's "Wise Lender/Investor" competition. 

The Investment Dar - 2008 Results KD80.3 Million Loss

TID has issued a press release on its 2008 financials (Arabic only).  The actual financial report or extracts from it (balance sheet, income statement, etc) don't appear to have been released yet.   So this is a preliminary review.

What are the major financial headlines?

1. 2008 net loss of KD80.3 million.
2. Total assets of KD1,200 million.
3. Total liabilities of KD1,000 million.
4. Shareholders' Equity of KD168.5 million.  A quick look at the above numbers suggests that this does not include minority interests.

Once the financial reports are issued, I post again with an analysis of the numbers.  

The announcement had some other important information:

1. First, we (that is TID) were able to pass through this crisis of asset valuation (definitely nothing to do with our business model) through patience, deliberateness and sound planning.  I'm going to pause for a moment or two while I compose myself.  Luckily at this hour there is no Turkish coffee to spill.  There is apparently plenty of praise to go around and it's only fair to mention all those who deserve it, including oneself.  
2. Elsewhere in the press release TID thanks the Central Bank and the Governor again, the Central Bank's "man" at TID, investors, banks, the Co-Ordinating Committee, TID's advisors, the creditors' advisors.
3. We confirm the soundness of the financial position of TID the improvement in the value of the assets with the recovery in markets  will enable us to discharge all of our obligations.
4. We are committed to implementing the terms of the restructuring which more than two-thirds of our creditors and investors approved as the best solution to exit from the crisis.
5. A significant component of all our assets have values much higher than their accounting values.
6. The provisions and write-downs are both unrealized and temporary.
7. A couple of times elsewhere in the release it's mentioned that more than 80% of creditors and investors approved the restructuring plan as the best way forward.

Now fair is fair (and AA is nothing if not fair).  Earlier I had granted an award of sorts to Dr. Esam Janahi and Gulf Finance House for creative thinking in press releases about their own financial difficulties.  Private sector competition of course. 

Tonight I'm going to have to re-award that honor to Adnan Mussalam and  his team at TID.  Dr. Janahi and his team are going to have to settle for the silver.

How was TID able to pull off this last minute sprint for the Gold?

The three primary factors in their victory were (in order of importance).  

1. Their trumpeting that their losses are not just unrealized.  But are also temporary. 
2. The self-praise. While the entire phrase "with patience, deliberateness and sound planning" was especially well crafted, it was the bit about sound planning.  That's sort of like the chap who  doesn't know how to swim, jumps in the English Channel, gets pulled out just before he goes down for the third and final time and then credits his athletic training and foresight for not drowning.  It takes a special sort of competitor to pat himself so vigorously on the back after falling into such a self-made disaster.
3. Presenting recourse to the Financial Stability Law as a major positive instead of the last recourse to prevent the restructuring from unwinding. 

Of course there were some negative marks for not mentioning the soundness of TID's business model.  Not having a reference to non core assets also cost a few points, though not that many since TID probably has to sell off most or all of its assets to repay its creditors.  It's difficult to use that last expression if one doesn't have a reasonable amount of core assets.

But in the game of life one doesn't have to be perfect, just a bit better than the other contestants.

The Investment Dar - Central Bank Approves 2008 Financials

AlWatan (Kuwait) carries a press release issued by TID announcing that the Central Bank of Kuwait had approved its 2008 audited fiscal report.

What a difference a day makes!  From a bitter lawsuit against the Central Bank to what might charitably be described even by local standards (and AA is a very charitable guy) as fawning praise.  

After thanking HE Shaykh Salim Abdul Aziz Al Sabah, Governor of the Central Bank of Kuwait for approving its 2008 financials, TID takes this apparent first opportunity to launch into an encomium which occupies the major part of the press release.  TID praises the wisdom,  high level of professionalism, advanced technical proficiency, and hard work of the Central Bank in preserving not only the financial sector but the entire economy of Kuwait from the thick clouds of the global financial crisis which affected all parts of the globe.

The press release also notes that TID's assets have improved with the turn in the market, its financial position is strong, and it will meet its obligations.

The press release ends with thanks to Ahmed AlWunyan of the Special FSL Court who accepted TID's restructuring after studying it with the Central Bank of Kuwait.

Commercial Bank of Kuwait - New Board The Godfather in Kuwait

An interesting post by Sal over at Alphadinar.    Why Dherar Al-Rabah was Appointed Chairman of Commercial Bank of Kuwait. 

The Investment Dar - Central Bank to Release 2008 Financials?

What a difference a day makes, apparently.

From its rather negative take in Sunday's edition, AlQabas' Monday edition has a much more upbeat story for TID.

Quoting sources with a strong connection to the Central Bank, AlQ says that yesterday the Central Bank of Kuwait approved TID's 2008 annual report which was caught up for over a year in "back and forth" between the two parties.  In the middle of last March TID submitted amended financials along with accompanying notes on some of the points the Central Bank requested  explaining why they were difficult to implement.  AlQ says that the numbers were agreed earlier.

AlQ's sources tell it that TID's  2008 loss is roughly KD0.078 per share in addition to KD 100 million of provisions.  This seems a bit strange.  If the loss per share is net income, this would include provisions.  Unless what is meant is fair value adjustments which don't pass through the income statement.   With about 945 million shares outstanding that would translate into an approximate KD74 million loss.  Compare that to the KD260 million loss that GIH took with roughly the same size balance sheet.  I'm a bit surprised that TID's loss was so small.  The creditor reaction was much more severe at TID than GIH.  Creditor reaction is usually a function of repayment prospects - both ultimate amount and time to collect.   Let's see what the financials show when they're released. 

Whatever the case, at 30 September 2008, TID had roughly KD416 million in equity.  So KD74 million or even KD174 million would not seem to be major issues. So again it's unclear why the fuss over the approval.  What was TID resisting?  It must have been something important since there's nothing like a restructuring to focus minds on survival.

Having given the 2008 results, AlQ says it's not clear if these numbers were used or if further adjustments were made.  The latter case would contradict the earlier statement that the numbers had been agreed.

It's expected that quarterly financials will be approved much more quickly as the major sticking point was the 2008 financials. The article says that TID's first, second, and third quarter 2010 interim reports are already at the Central Bank.  Presumably a typo for 2009.

The article concludes by stating that this week the Creditors' Co-ordinating Committee will hold a meeting with the management of Commercial Bank of Kuwait to agree a satisfactory formula for resolving the dispute over the Boubyan Bank shares. While several possible mechanism have been discussed no agreement has been reached on a single one.

If true, this article represents the first bit of positive news for TID in some while.  A settlement with Commercial Bank would be another step forward.  The next key hurdle is the decision by the special FSL court as to whether to entertain AlMasar's objection.  If TID can get under the FSL, that will a major and perhaps the decisive step towards implementing the restructuring.

The Investment Dar – “Out of Breath” in Its War on Many Fronts

Update:  AlQabas had a more upbeat assessment in its Monday 12 April issue.  Here' s the link to my post.

So says AlQabas. 

First, let's review what AlQ had to say. Then some comments.

AlQ cites the following issues:

1. TID's 2008 audited financial report remains "frozen" at the Central Bank of Kuwait which refuses to approve it. Reportedly this is leading to a loss of confidence among many creditors that the restructuring plan will be implemented. 
2. The legal case by AlMasar Leasing – involving debt in excess of KD10 million – poses a threat to creditor acceptance of the restructuring plan. AlMasar is close to the implementation of the judgment in its favor and has obtained a precautionary block on assets sufficient to repay the debt. TID has filed an urgent challenge (motion) to stop the implementation of the order. The Court is reviewing TID's motion. Legal sources say that there are fears that the creditor alliance will disintegrate if AlMasar's judgment is upheld and enforced. That other creditors will see courts as a way to get their money back "early". 
3. The legal struggle with Commercial Bank of Kuwait over Boubyan Bank remains unsettled. AlQ says that in its weekly meeting held right before the end of last week TID took the pulse of the Creditors' Coordinating Committee about a potential negotiated settlement to this dispute. Details were not discussed. The goal was to determine if there were any creditor objections. If not, then TID has a green light to proceed. 
4. Also at the same meeting the CC discussed whether to retain the Chief Restructuring Officer in the coming phase or replace him. Three international firms reportedly have submitted proposals as well as the existing CRO. Details of the four proposals were reportedly not discussed.
   

Now to the comments.

1. Indeed TID has to be a bit short of breath with all the battles it is facing. Clearly, this case is quite different from that of Global Investment House. The key difference is a lack of confidence.   The Central Bank isn't confident in the financials.  Dissident creditors apparently think expensive and messy court cases offer a higher prospect of recovery than the restructuring - though they could be hoping to prompt a buyout by other creditors if they threaten to destroy the restructuring through their recalcitrance.  The rest of the creditors clearly want a monitor at TID.  All this makes for a very fragile situation.  
2. Why hasn't TID's audited 2008 financial report been released? Why is the Central Bank refusing to sign off? Presumably, TID's auditors, the local affiliates of KPMG and PwC, have completed their audit. Unless there is a substantial problem in their opinion (say an adverse opinion or a disclaimer), they have signed off on the "numbers". If the latter is the case, the Central Bank  would appear to be saying it doesn't trust the audit work of two major firms.  Ouch!  This is not just a slap at TID but also at these two firms.  
3. Why doesn't TID just give the Central Bank what it wants?  Quibbling over numbers would seem rather silly when the patient is  barely alive in intensive care.  The rumors are that the Central Bank is demanding additional provisions and reductions in the carrying value of assets. Seems simple to just sign on the dotted line. - whatever the results.  Historical statements from 2008 are just that history.    It's hard to see there being a major impact on the banks.  They have their own advisor's (Morgan Stanley's) cashflow focused analysis on the best path to recovery. And without any audited financials a significant number of them have decided that the restructuring is the "best" deal for them.   And, as I've written before, this looks a lot like a disguised liquidation.   So how would adverse financials change that?  The diagnosis would remain the same.  And the conclusion very likely the same.  A fire sale by a liquidator is not a good recipe for recovery. 
4. It must be is that the additional amounts are so large that they pose a serious problem.  Negative shareholder equity would probably  greatly complicate recourse to the Financial Stability Law if not make it impossible. The FSL is designed to rehabilitate companies.  Not to provide cover for a  liquidation. No clear cut Chapter 7's need apply. Similarly, there could be other problems.  A law that if losses exceed a certain portion of  paid in capital, the firm must raise more or enter formal liquidation.  Sometimes problems like these can be solved by having an Extraordinary General Meeting of shareholders vote to use reserves (share premium, mandatory and voluntary reserves to offset retained losses).  Presumably, if it were that simple a matter then  TID would take the step.   If it's a need for additional new equity, that's probably something that shareholders probably aren't particularly keen to do right now.  So the battle on the financials is to prevent getting into a worse situation.
5. The real issue with AlMasar would seem to be it's formal objection to TID entering under the protective wing of the FSL.  There are other creditor cases out there, e.g. BLOM.  Yes, AlMasar has the "block" on some assets.  But if TID is successful with the FSL won't that solve its legal problems, especially those in Kuwait?  So isn't the FSL objection the key? The AlQ article is silent on this topic. 
6. Also the comment about AlMasar success leading other creditors to similar action is probably correct in one sense.  But, if all the creditors rush for the exit, the ultimate recovery is going to be  affected.   If any bank's creditors and depositors suddenly asked for their money back, no bank could pay them back immediately. Not Deutsche Bank.  Not National Bank of Kuwait.  And TID is very very far away from being in NBK's very strong position. The best recovery is going to come from a controlled process.   Hopefully, the banks have figured this out by now, though I suppose in a panic logic is the first casualty.
7. Boubyan turns not only on the relative strength of the two parties' legal positions but more importantly on the ability of the weaker party to tie the shares up in court for years and years.  In terms of legal advantage, I think the legal definition of the transaction is  critical  If the  original transaction is considered a sale, then CBK owns the shares which it bought at a bargain price.  TID had the opportunity to buy them back but failed to do so.   Tough luck.  Unless in consideration of "equity" the Court allows TID the opportunity to go "back in time" and complete the repurchase.  In which case, it would make abundant sense for the banks to lend TID the money.  Lend $200 million, get shares worth $400 million, sell them to NBK and  put a cool $200 million  extra into TID's estate.  If it is a secured loan, then CBK owes TID  the excess of the realization proceeds from the collateral over the  repayment of the loan.   In which case  the result is the same as the Court sanctioned "time travel" mentioned above.   In terms of waiting, Commercial Bank probably has a less urgent need for the cash than TID.  Luckily for CBK, NBK is running the show at Boubyan so the likelihood of something going really wrong going there is fairly low.  That should put a floor of sorts under the share price - assuming there are no legacy problems from before NBK's stewardship began. And make waiting a bit more palatable, though there are signs that shareholders at CBK aren't particularly happy now - if AlQ's account of the recent OGM is accurate.
8. The debate over the continuing role of the CRO is pretty clear evidence of the creditors' continuing lack of confidence in TID's management. Under the restructuring, they are taking TID's assets into companies they will control (assuming that AlQ's earlier account of the restructuring is correct).  Yet, they still seem to feel they need an on site minder at TID.   Usually in a restructuring the creditors would form a committee to monitor the borrower.  Or perhaps require an accounting firm to do periodic reports to confirm the borrower was discharging its obligations.  Both of these mechanisms on a post facto basis.  That is, the creditors check on the borrower after the fact -  to review its conduct in the last quarter.  It seems that with TID the creditors want a monitor for  "real time" monitoring.  With the assets in separate (from TID) holding companies,  it's unclear just precisely what the CRO will monitor.  Will he run those holding companies?  And how will his position fit in with that of the Central Bank "monitor"?  Especially, since if TID is successful in getting under the FSL umbrella, the Central Bank is probably going to have a monitor  in the company to keep an eye on things.  This isn't a trivial matter since the expense isn't trivial.  The creditors are in effect saying we're willing to pay a price to make sure we keep an eye on TID's management.

Commercial Bank of Kuwait - Fireworks at Annual Shareholders' Meeting - Directors Not Released from Responsibility for Fiscal Year 2009

AlQabas has a report on CBK's Annual General Meeting of Shareholders ("AGM") 7 April.  (Also sometimes referred to as an Ordinary General Meeting to distinguish from an Extraordinary General Meeting.  The difference between the two arises from the entity's articles of association which set forth the powers of each.  For example, an amendment of the Articles generally requires an EGM).

Some 85.49% of shareholders were at the meeting which proceeded calmly until the 9th Agenda item - the release of the Board of Directors and the Managing Director from responsibility for their conduct during the last fiscal year (2009).  Generally, not a contentious issue.  Usually approved quickly.

This time was different.   As the AGM moved to Item #9, Ali Musa Al Musa, Chairman and Managing Director of Securities Group,  made two proposals.

1. To delay voting on releasing the old board and the previous Chairman/Managing Director, Dr. Abdul Majid AlShatty from responsibility for their conduct during fiscal year 2009 until a future AGM  (While these are generally scheduled once a year, there is no reason one couldn't be called sooner).  In the interim the new board would conduct a legal, management and accounting review of the conduct of the previous board and managing director to determine if they had taken any salary, benefit, compensation or other perk during 2009 and the period up to the date of the AGM (when they were still in control of the bank).
2. And that in line with sound corporate governance, the principles of disclosure, transparency etc the AGM vote that no member of the board or the managing director can receive any salary, benefit, compensation or other perk without the prior agreement of an AGM with full disclosures of the package. 

Mr. AlMusa's proposals passed with 79% of the vote.

There is a transcript of the exchange between Mr. AlShatti and Mr. AlMusa.  As you might expect, AlShatti took AlMusa's proposals as a personal attack.  So there is some interesting back and forth.  AlShatti saying that he and Jamal AlMutawa had taken at 15% salary cut noting that whatever the AGM said, or did not legally the Board was not released for its conduct until after 5 years.  He also noted that the board had served loyally for 12 years.  For his part AlMusa denied that he was accusing anyone, but fighting for fundamental principle of shareholders' rights.

Buried in the third paragraph from the end of the article is a statement that the Central Bank of Kuwait supposedly ruled that any profit from the sale of Boubyan Bank shares by CBK belongs to CBK's shareholders not the creditors of TID.   This is an important point to watch in view of the current market value of BB being roughly twice the amount of the repo between CBK and TID.

CBK's new board comprises Darar Al-Ribah as Chairman, Ali A-Awadi, Anud AlHatharan, Ahmad AlMishari, Badr AlAhmad, Tariq AlUthman, and Mahdi AlJazaaf.   

Note:  AlShatti had objected to the election of AlMishari saying he had not been cleared of his responsibility for 2009 and that it was nothing personal.   AlMishari apparently was a director in 2009 but resigned prior to the AGM.   In responseAlMishari said he had resigned for "lack of fit" with the board.

Alternate Directors (in case one of the above leaves the board) are Ali AlMusa, Abdul Rahman AlAli,  and Mohammad AlShatti.

The Investment Dar - Creditor Files Objections to Resort to Financial Stability Law

AlQabas reports that Al Masar Leasing and Investment Company  has filed a formal objection with the special Circuit Court at the Kuwaiti Court of Appeals to TID entering its restructuring plan under the aegis of the Financial Stability Law.

As you'll recall (and if you don't here's the link), any interested party may object to an investment company's use of the FSL within 15 days of receipt of formal notice that the Court had provisionally accepted the debtor's request.

AlQabas says that perhaps other companies will also object -  though it seems to the window for objections should be closing soon.  TID filed its request around 10 March and announced the Court  had accepted its request on 11 March.  Even though it would take some time for the Court to prepare the necessary notification letters and for creditors to receive them, there can't be that much time left.  

The Court gets to make the final decision on any objections. 

As a side note, it appears that the Central Bank of Kuwait has not yet approved TID's 31 December 2008 financials.  From the above link on the FSL, you'll see that the CBK plays a key role in the FSL implementation process.