What’s Behind GFH’s Treasury Share Transactions?

You Should Have

A shareholder's relationship with the board of a company in which he or she has invested in is similar in several ways to the relationship of a younger sibling with an elder brother. 

This isn’t the first time I’ve posted on this topic.

Earlier posts here and here have focused on quantifying the costs to shareholders. 

Today I want to step back and offer some hopefully informed speculation on what might be going on. 

See if you agree

Treasury Share Transaction Basics – Not an Income Statement Event

To provide a framework for this post, some basics on Treasury Share transactions.

Under generally accepted accounting principles, gains or losses on Treasury Share transactions are reflected directly in shareholders’ equity in the Consolidated Statement of Changes in Owners’ Equity.  

That is, they do not appear in the Income Statement.  

And because of this some shareholders might miss them!

However, when a firm engages in these transactions, there is an economic gain or loss to shareholders, particularly because most of the time these are cash transactions. 

Thus, it's proper to consider them as "income" or "loss" as I will in this post. 

And it's important for shareholders to be aware of them as these transactions affect the value of their firm.

History of GFH Treasury Share Transactions

As the chart below demonstrates, it’s only since 2017 that GFH has become very active in Treasury Share transactions. 

Both the volume and value of transactions has increased dramatically during this period as have FYE holdings, shown here in USD terms (EOP Value) and as a percent of total issued shares (% TIS).

GFH Treasury Share Transactions
Millions of US Dollars
FYE	Buy	Sell	Cancel	EOP Value	% TIS
R2014	$0	$0	$0	$1	0.11%
2015	$5	$2	$0	$4	1.09%
2016	$7	$11	$0	$0	0.10%
2017	$83	$25	$0	$58	2.89%
2018	$161	$134	$0	$85	6.94%
2019	$215	$177	$51	$73	8.05%

How did GFH fare on these transactions?

Over the period FY 2017 through FY 2019, GFH has incurred losses on Treasury Share transactions totaling USD 58 million. 

1. USD 3 million in FY 2017
2. USD 27 million in FY 2018 and 
3. USD 28 million in FY 2019.

Beyond that in FY 2019 GFH canceled Treasury Shares that it had purchased for USD 51 million.

In FY 2019, it acquired USD 32 million in Treasury Shares for a “share incentive scheme”. No economic gain or loss but a use of GFH shareholders' funds.

It also obtained OGM approval to use 140 million of Treasury Shares for an acquisition or acquisitions, subject to CBB approval.

That’s a quite a lot of expensive Treasury Share transactions –none of which appear in GFH’s Income Statement.

Let’s take a closer look to try and understand what is going on and why.

2019 Treasury Share Cancellation

After having acquired 207,547,170 shares of its own stock for USD 51 million, the Bank with the approval of shareholders and its regulator canceled these shares of stock.

Instead of canceling them, the Bank could have retained these shares or sold them back to the market and obtained cash. Perhaps, not USD 51 million in cash but likely a substantial portion of that amount.

Why then would it cancel the shares?

There is a theory that share buybacks and subsequent cancellation of the shares can improve both the book value and market value of a stock because reducing the number of shares increases earnings per share (EPS).

This assumes that the cost of acquiring the shares, including future earnings on those foregone assets, is less than the value created by cancelling them.

Disclosure:

AA doesn’t believe this theory. 

Increasing the price of an individual share does not increase the value of the firm. 

If a company wanted to increase the price of a share, it could simply do a reverse stock split. Number of shares reduced, EPS increaased, no large amount of cash spent. 

Buying and then cancelling shares may in fact decrease the value if the purchase of the shares removes cash or other assets that the firm needs to increase its value or maintain its ongoing earnings stream.

There is in AA’s view one possible exception. When a company has cash but no compelling investment opportunities, then a share buyback may make sense if tax laws favor capital gains over ordinary income.

Absent that, these transactions tend to amount to spending real assets to achieve an accounting gain. 

But let’s assume the theory does work.

After all as Madame Arqala could tell you, AA is not always right.

The quantum of shares extinguished needs to be significant to have a significant effect.

GFH extinguished roughly 5.6% of its existing shares.

It’s hard to see this having a material effect on the per share price.

According to AA’s rough calculations and assuming this theory has validity, the price of a GFH share would have increased USD 0.01 in 2019 assuming a P/E of 10x.

But there’s more that makes this transaction baffling.

Having extinguished the shares, GFH proceeded to issue bonus shares equal to the number of the shares it cancelled. 

In effect undoing whatever value enhancement the cancellation may have had.

The cost of this apparently pointless exercise? One that had no apparent positive impact on its shares, save for an accounting “gain” of USD 4 million? 

In case you’re wondering that gain was also refected directly in equity.

A mere USD 51 million in cash in exchange for USD 4 million in non cash “income”.

What are some comparable amounts?

It’s roughly 45% of FY 2018 reported net income attributable to GFH shareholders! 

Or 64% of that in FY 2019.

What would motivate GFH to do this?

AA believes that GFH wanted to make “room” to buy more Treasury Shares because the Central Bank limits the number of Treasury Shares GFH is allowed to hold.

To do this GFH would have to find a "way" to remove the Treasury Shares from its balance sheet.

That means a sale or cancellation.

It almost certain that GFH couldn’t find a buyer for a block sale or block sales in “off market” transactions because there just wasn’t appetite given GFH’s condition and prospects.

That would mean GFH would have to sell those shares “in the market” almost certainly lowering the price of GFH stock.

Thus offsetting the effect of GFH’s purchases and undoing all its previous "good" work. The stock has been in slow decline for some time now.

So cancellation was the one remaining option if GFH wanted to continue Treasury Share purchases to "support" its share price.

I can’t think of another good reason for this bizarre economic transaction.

Keep that thought in mind as we take a look at GFH’s Treasury Share purchases and sales.

Treasury Share Purchase and Sales

Why would a bank be buying and selling its shares?

There are several reasons.

Market Making

One reason is to provide liquidity to the market so that shareholders can buy and sell their shares without causing temporary demand/supply imbalances that move the price dramatically.

GFH have engaged SICO to make a market in GFH shares on the DFM and BSE. Until recently the KSE did not allow market making.

What does a market maker do?

The canonical answer is that a market maker supplies liquidity to the market, filling in transient gaps on the demand side (purchases) or supply side (sales) as needed.

How does that role help the market in a company’s shares to run smoothly?

Buyers or sellers can conduct their transactions without having to conduct transactions at prices significantly different from the “fair” value of the shares.

Two simple examples.

Shareholder Abdullah wants to sell his shares on the BSE but there are not any or not enough interested buyers close to his desired price to fill out the buy side of his ticket.

The market maker steps in to supply the missing demand at what the market maker believes is a fair price.

Brother Abdullah can sells his shares to the market maker without having to reduce his price dramatically, conduct his sales over a prolonged period, or not sell all the shares he wants.  

The market maker now owns the shares.  He either holds them in "inventory" so he has sufficient shares to fulfill his responsibility on the sell side.  Or if he has "too many" shares he gradually sells shares into the market to reduce to the appropriate level.

On the other hand, suppose Brother Jassim in the UAE wants to buy GFH shares at the DFM but no one is selling in the amount he wants to buy. The market maker steps in to save the day, selling from his (the market maker's) inventory of GFH stock.

The market maker of course keeps a sharp eye on price trend in the stock and generally holds no more "inventory" than he needs to in order to fulfill his role.  The last thing he wants to do is hold shares that lose value.

If, by a happy circumstance as appears to be the case here, the stock issuer bears the risk of price declines, then the market maker may take a more relaxed approach to inventory valuation.

Over time one would expect that the market maker to earn an appropriate profit or break even.

If market making results in continued large losses, then this is a sign that the “problem” with the particular stock is not liquidity but rather fundamental value. Or a system wide lack of liquidity in the market. That would be noticeable across more than one stock though. Or the market maker is an idiot.

Two years seems to be more than an adequate time frame to make the call on GFH shares. 

It’s not liquidity. 

It’s lack of demand, fueled no doubt by investors’ ratings of the stock.  

SICO is a professional shop. It acts as market maker in the BSE and DFM for other shares and seems to be doing quite well.

Because it's not one of the two latter cases, then what's happening is that GFH is trying to support its share price.

A completely different goal. 

And one that perhaps should not be called “market making” so much as “share support”.

If shares continue to decline, then it seems that all that is being accomplished is delaying the inevitable and spending shareholder money on a futile quest.

Let’s look at some “performance” data.

During FY 2019, GFH sold Treasury Shares with a cost of USD 177 million for USD 150 million.

That works out to a gross margin of roughly negative 15%. That is, for every USD 1 GFH “invested” via a TS purchase, it received USD 0.85 on sale.

During FY 2018, GFH sold USD 134 million for USD 106 million, a gross margin of negative 21%. For each USD 1 invested, GFH received USD 0.79.

This doesn’t look like “market making” it looks like an attempt at price support as do the dramatic increases in the volumes of transactions.

Less charitable folks that AA might say given the volumes of transactions and losses involved it looks like market manipulation.

As noted in an earlier post, during 4Q18 GFH was responsible for almost 40% of the trades on the three markets in which it is listed (Bahrain, Kuwait, and DFM). To be clear that’s GFH Treasury Share transactions as a percent of total trading on all three markets. Not that GFH was trading in the KSE.

That, as you know, is a critical time of year, when firms and funds prepare their annual audited financials. A time of year when auditors get serious about the numbers they are asked to audit.

What other reasons might a company buy back its shares?

Opportunistic Investments

The market is underpricing a company’s shares. The company can buy them “cheap” and then later sell them “dear”.

 

Given the secular decline in GFH’s share price over years and its weak condition and prospects, this doesn’t seem to be a likely scenario.

Rather it seems that GFH is buying “cheap” and then selling “cheaper”.

Currency for Acquisitions

A company buys its shares in order to use as “currency” in an acquisition. You’ll recall that GFH obtained shareholder approval to use up to 140 million of Treasury Shares for acquisitions, subject to CBB approval

This doesn't seem a realistic scenario..

Why?

It’s hard to imagine that potential sellers of assets to GFH on an “arms length” basis have a substantially different view than the market about the worth of any shares to be proferred. 

However, this method can work in special cases.

A seller who knows that his “fine” assets are worth less than the asking price, may well sell his overpriced assets for overpriced stock as long as he achieves his goal of getting a certain value for those assets, avoiding a loss, declaring a profit, etc..

Having been around the proverbial IB block multiple times, AA has seen more than a few valuation miracles.

Ones where buyer and seller agree values divorced from reality to mutually assist one another in achieving each other's goals.

You may be familiar with some “round-trip” asset sales in the GCC where the same assets passed between two parties at increasing prices over the years with such sales justified by offsetting changes in the buyer’s and seller’s “strategies” that promote a transaction. 

U wants a pan MENA network of banks and then it doesn’t. 

B wants to sell its network and then it wants to buy it back.

AA’s smarter brother has even seen one where a considerable “gift” was given to a debtor in a rescheduling. 

Instead of taking 70% of the debtor’s equity as all reasonable models determined, a compassionate creditor took only 30%. 

Thankfully, AA’s brother was not asked to “fix” his model to show that valuation.

AA’s “Call” - GFH’s Treasury Share Transactions are Designed to Support the Price of Its Shares

There seems to be no reasonable business rationale for the amounts spent by GFH on Treasury Share transactions – the USD 51 million in share cancellation and the USD 58 million losses on Treasury Share sales.

Nor any compelling reason why GFH would suddenly find the need to buy USD 32 million in Treasury Shares for a “share incentive scheme” in a single year.

The proposal to use 140 million Treasury Shares for an acquisition also seems a bit far fetched at least for one on a true arms-length basis.

It seems to AA that GFH is using the latter two transactions to provide rationale for acquiring more Treasury Shares.

The goal certainly seems to be to prop up the price.

The question is for whose benefit?

Well, if a shareholder borrowed funds to buy GFH shares and pledged the shares to a lender, it would be mighty inconvenient for that shareholder if the price of GFH shares declined. 

The shareholder might have to provide additional cash to top up the collateral or reduce the loan principal.  In extremis, he might have to sell shares at a loss to reduce or repay the loan. 

Neither very appealing.

Declines in the value of unpledged shares can also be mighty inconvenient if one has to mark them to market. 

One’s performance record is tarnished, hampering new business generation.

One’s own shareholders might ask embarrassing questions.

A truly uncomfortable position particularly if the shareholders are VIPs or, as they’re sometimes known locally, VISs.

This may also explain why GFH declared a cash dividend for FY 2018 despite the fact that it had no real cash income that year. See post here.

Dividends help defray interest on a loan.

Dividends also provide a return on one’s investment. Just the thing one might need if the stock price is trading down instead of up.

One would expect that expenditures of this amount would be taken for an important shareholder.

Who might that be?

The 7,464 Abdullahs with holdings less than 1% each in GFH- some 62% of all shares-- probably don’t have the “wasta” or the “weight” to command such largesse.

That leaves just 15 other shareholders.

14 of whom own 20% of the shares and appear not to be related to one another. 

Leaving just 1 shareholder with 10% who no doubt by mere coincidence became a shareholder one year before the Treasury Share transactions began in earnest.

Is there incontrovertible proof this is the case and that GFH is trying to prop up its share price?

No. 

Just a pattern of behaviour that AA assesses is the most likely explanation for GFH’s actions.

It may well be the case that GFH’s Board has heard of problems among the Abdullahs who hold its shares and is trying to mitigate their troubles.

Or is undertaking these transactions for solid business reasons that AA isn't clever enough to discern.

As we say in the region “ الله أعلم “

GFH - Review of FY 2019 Income And Suggested Questions for the AGM

What Better Time than the AGM!

UPDATED TO INCLUDE INFORMATION FROM KHCB'S OGM/AGM ANNOUNCEMENT.

See related posts here and here.



GFH has published its audited FY 2019 financials as well as a very illuminating presentation (hereinafter “Presentation) on FY 2019 results. This latter document is well worth a read as it gives a quick overview of GFH’s performance.

This post discusses those results. Or at least the ones that caught my eye.

As an added bonus, I’ve included a section with questions that interested shareholders might wish to pose at GFH’s Annual General Meeting (AGM) or if you prefer Ordinary General Meeting (OGM) later this year.

That I believe will be the most useful part of this post.

REVIEW GFH FISCAL YEAR 2019 FINANCIALS

Net Income – Significantly Down but “Better Quality”

The “headline” news is that reported consolidated net income for the Group was USD 67.2 million down from USD 115 million the year before – a decline of roughly 42%.

As per GFH’s press release the decline was largely due to increased provisions at KHCB. (See Potential Questions section).

Net income attributable to GFH shareholders was a higher but still disappointing USD 80.1 million versus USD 114.1 million for FY 2018 a decline of only 30%.

I hope the two terms “consolidated net income” and “net income attributable to shareholders” caught your eye as well as the major difference between the two numbers.

How can that be?

The “magic” of consolidated financial statements.

Key takeaway. 

Consolidated financials are an accounting “construct” not the financials of a legal entity.

That’s a very important bit of knowledge for all who use financial reports. 

Previous post here outlining some of the “realities” of consolidated financials.

In the presentation, apparently given by Mr. Surya Hariharan (Head of Financial Control) he noted that the highlight of the operating income was an improvement in quality.

How does a decline in the amount increase quality you ask? 

Page 6 of the Presentation gives the answer. 

Compared to 2018, the quality of income for 2019 has improved substantially with 71% of the profit being cash profit compared to 2018 which did not have significant cash income.

When a firm’s income is largely non cash, you might expect that the board and management would be “mighty careful” (that’s a technical financial term) with shareholders’ cash.

Wouldn’t you? (See Potential Questions).

GFH Investment Banking Revenue

GFH’s Investment Banking Segment (IBS) contributed USD 95.9 million in revenues or some 29% of total revenues. 

A look at at Note 26 Related Party Transactions page 52 discloses that 99.9% of IBS revenues came from placements with Assets Under Management. That is, assets that GFH manages for clients.

One can imagine the difficulties associated with closing the “sale”, can’t one?

“Loss” on Acquisition of Additional Interests in Tunis Bay and RSREDPP

In line with GFH’s continuing “commitment” to “transparency”, if you look at Note 21, you’ll see a somewhat “obscure” accounting (that is a charitable financial term as well as being semi-technical) for the acquisition of additional interests in Tunis Bay and Residential South Real Estate Development Company.

While the word “loss” isn’t used and this amount doesn’t appear in GFH’s Income Statement, you will note that the transaction resulted in a USD 51.4 million charge to Retained Earnings in the Consolidated Statement of Changes in Owners’ Equity. (See Potential Questions Section).

As one of AA’s colleagues used to say, book the gains through the Income Statement and the losses direct to Equity whenever you can.

POTENTIAL AGM QUESTIONS FOR SHAREHOLDERS

This I hope will be the most useful section of this post.

KHCB – Raising of Additional Tier 1 Capital BHD 37.7 Million

Why would GFH shareholders be interested in KHCB? Because GFH owns 47% and has effective control.

More importantly, as indicated above KHCB’s fortunes or misfortunes affect GFH shareholders.

Per KHCB’s FYE 2019 audited financials KHCB took a provision of BHD 20.4 million in the year. It also made a prior period adjustment to retained earnings for another BHD 11.1 million for a total of BHD 31.5 million.

The BHD 20.4 million in provisions--which went "through" the Income Statement-- led to a net loss for the year of BHD 15.0 million. 

The additional BHD 11.1 million is “buried” in Consolidated Changes in Owners’ Equity.

More importantly, as a result of both the provisions and the prior period adjustment, KHCB’s capital is BHD 15 million below the CBB requirement of BHD 100 million.

As per Note 1 to KHCB’s financials, the Board have mandated an “international bank” to raise BHD 37.7 million in additional tier one capital to “help strengthen its equity and meet capital requirements”.

AS PER KHCB'S OGM/EGM ANNOUNCEMENT IT WILL SEEK EGM APPROVAL TO RAISE UP TO USD 200 MILLION IN AT1 NEW CAPITAL.

1. Why is KHCB planning to raise 2.5 x the capital shortfall?
2. The new amount is 5x the capital shortfall! 
3. A potential sign of extremely serious problems at KHCB.  Or perhaps an intended acquisition?
   
4. Does GFH anticipate more provisions will be required by KHCB?
5. In posing this question, recall that GFH controls KHCB and should be in a position to know. They certainly were when they prepared the prospectus for the USD 300 million Sukuk issued this February. Earlier post here.
6. Or is the Central Bank of Bahrain requiring this additional amount?
7. Will the new capital be in the form of common equity thus resulting in dilution of existing shareholders?
   
8. Or will it be in the form of a debt-type security that enjoys preference in payment over dividends to shareholders? YES.  A Sukuk.
9. Note well that regardless of the form of the new equity, existing shareholders of KHCB-including GFH-are likely to see the value of their shares decline.
10. Because GFH owns 47% the impact on GFH will be significant.  The value of the KHCB's shares it holds are likely to decline significantly.  GFH shareholders won't see that because KHCB is consolidated into GFH. 
11. But it will affect dividend (cashflow) to GFH in a major way as the Sukuk holders will get paid from Net Income first.  And they are unlikely to price their Sukuk cheaply.  
12. KHCB is also asking shareholders to approve appointment of a market maker.  If KHCB begins engaging in expensive Treasury Share transactions similar to GFH, KHCB and GFH shareholders will be negatively impacted.
    
13. Will GFH be participating in the new AT1 equity?  
14. If so, will it be using any of the 140 million Treasury Shares it obtained shareholder approval to use for acquisitions to participate in the new capital raising for KHCB?
15. If so, how many? 
    
16. If you’re interested, here’s a link to a more detailed discussion of KHCB’s 2019 financial performance.

Management of Shareholder Cash

As noted above, GFH’s FY 2018 earnings were substantially non cash.

Yet, in FY 2019 the Board approved substantial discretionary expenditures of cash equal to roughly USD 140 million. 

And then went on in FY 2020 to raise USD 300 million in debt at 7.5% per annum.

Was this prudent?

1. How does the Board justify paying cash dividends of USD 30 million when income was non cash?
2. Courageous shareholders may consider asking representatives of the Central Bank of Bahrain present at the AGM if it is common practice for the CBB to approve cash dividends when net income for a year is substantially non cash.
3. GFH canceled USD 50 million in Treasury Shares which could have been sold back into the market for cash. Why was this done?
4. GFH also continued its Treasury Share transactions resulting in a cash loss of some USD 27 million in the year.
5. It also purchased some USD 32 million of Treasury Shares for a “share incentive scheme”.
6. Did the bank really need to purchase all these shares in one year?
7. GFH is perhaps anticipating fantastic performance in 2020 and the need to pay out large bonuses?

Treasury Share Transactions

What is behind the continued costly-to-shareholders purchase of Treasury Shares?

1. Are purchases in these amounts really required to provide liquidity to the market? To enable shareholders to more easily buy and sell GFH shares?
2. If this is the case, how does the Board explain the continued losses – USD 27 million in FY 2019; USD 25 million in FY 2018?
3. In general “market making in shares” for liquidity purposes should result in a small net gain or a small net loss.
4. Why isn’t this the case with GFH?
5. Since it isn’t, it suggests that perhaps the reason is not providing “market liquidity” but is really something else. 
6. As noted above, in FY 2019 the bank bought USD 32 million of its own shares for a “share incentive scheme”.
7. As hinted above, it doesn't seem that It really need to buy this amount in one year.
8. As AA argues in a separate post it certainly appears that GFH is using Treasury Shares and cash dividends to attempt to maintain its share price.
9. If that analysis is correct, is the expense worth the effort? And for whose benefit?

2020 USD 300 Million Sukuk

As discussed above and in an earlier post, in early 2020 GFH issued a USD 300 million 5 year sukuk at a fixed interest rate of 7.5% per annum.

If GFH has avoided the discretionary spending referred to above, its need for the borrowing would have been reduced by some 47%.

That would result in savings of USD 10.5 million per year in interest.

Or USD 52.5 million over the five year life of the sukuk.

Update:  GFH is proposing USD 50 million in cash dividends for FY2019.  That is roughly 63% of FY2019's net income attributable to GFH's shareholders. 

It also raises the question about the prudence of GFH's cash management.  Did it borrow an additional USD 50 million it didn't need to?

That increases the interest cost on the sukuk over its life another USD18.75 million.

Shareholders may want to probe a bit to understand the Board's rationale for its cash and debt management "strategy". 

It’s also important to put this borrowing into the context of two statements from the FY 2019 Presentation (page 6). 

Interest expense has increased 181.8% since 2019.

This appears to be a reference to GFH Treasury interest expense. Note that KHCB’s interest expense is included in GFH’s Income Statement under the “Commercial Banking” heading.

And more importantly 

Compared to the previous year, the Bank [GFH] has reduced its negative spread significantly.

That means the Bank still has a negative spread.

It earns less on Treasury Assets than it pays for the money to finance these assets.

Easy to see that because GFH as per the Presentation is paying 4.84% for money market funds (page 4)! 

Adding a fixed 7.5% per annum debt doesn’t seem like it will help on the negative spread.

A negative spread is generally considered by Treasurers that AA knows not to be a good position for a bank.

More importantly, it often leads a bank to venture further out on the risk spectrum to get a higher return.

Usually but not always with less than “happy” outcomes.

In FY 2019 GFH acquired some USD 240 million in “structured notes” in its Treasury Portfolio. This is a new asset class within the Portfolio. 

Shareholders may want to ask the Board about this new endeavor particularly the risks such instruments typically pose and whether GFH is in a financial position to assume these risks, how risks will be controlled, etc.

Some tuition from the folks at the USA’s SEC on structured notes.

Those with long memories (probably not most investors or bankers) will remember the banks in Bahrain that had problems with “structured notes” in the past, though it wasn’t just Bahraini banks whose hopes were dashed by this type of asset.

Those like AA also remember less than an honest and transparent sales pitch on these notes from major international investment banks when AA went over to the Dark or Buy Side.

I once called out a representative of a marquee international IB by pointing out that what he had just said contradicted what was written in their prospectus. 

Apparent “Loss” on Acquisition of Additional Interests in Tunis Bay and RSRED

The transaction resulted in a USD 51.4 million charge to Retained Earnings which certainly looks like a “loss” though it did not pass through the income statement.

1. How does GFH Board and management explain/justify this transaction?
2. In other words, what were the good reasons for buying these interests if it resulted in a charge to Retained Earnings of this magnitude?
3. Does the USD 51.4 million charge relate solely to Tunis Bay?
4. That seems to be the case given the statement on page 4 in the Presentation. But good to confirm.
5. If not, how much related to RSRED?
6. Regardless of the answer to that question, what was the consideration “paid” by GFH for the acquisition of RSRED?
7. Did GFH acquire all or part of RSRED in return for reducing the principal of the Villamar Sukuk? That is, it acquired RSRED shares which it “considered” to be a repayment (unlikely to be a full repayment) of the Sukuk? In effect a non cash repayment of part or all of the Sukuk.
8. Why should shareholders care?
9. GFH bought the sukuk from AlRajhi largely for cash. 
10. If it is now treating the acquisition of assets from Gulf Holdings as repayment, the value of the assets acquired would be very important.
11. If GFH is now booking charges to equity based on the RSRED assets acquired being lower in value that the consideration “given”, that would raise questions about the USD 77.8 million in restructuring income on the Sukuk booked in FY 2018.
12. See earlier post on Villamar Sukuk for more details on why valuation of any non cash assets received to “repay” the Sukuk matters. Note the linked post has a link to an earlier post.