Gulf News reports that the Dubai Government has announced the appointment of a Chief Restructuring Officer for Dubai World (Aidan Birkett of Deloitte).
A bit further down is the more depressing news: Dubai World is asking for a standstill on debt repayments until 31 May 2010.
Here's Khaleej Times report.
Just what is it they're humming down there?
Thursday 26 November 2009
UAE and Bahrain Rulers Join Forces to Combat Sand Shortage
26 November marks the last official day of Saudi sand exports to Bahrain.
As of tomorrow, there will be an official sand drought in Bahrain.
As noted in an earlier report, the Nass Company has already begun importing sand from Oman.
I was trying to think of a funny spin to put on this. But it is a serious problem and steps are being taking to resolve it.
AA will, however, keep his eye on Saudi exploration to discover new sand reserves.
Earlier posts can be found through the use of the label "sand".
Learning to Let Go
They say that the ability to leave one's work at one's desk is the key to a happy life.
Seems Mr. Pinto described in the article as a "financial compliance officer" was able to do just that on his lunch hours.
Wednesday 25 November 2009
Dubai Raises US$5 Billion from "Private Sector" - Or Did It?
You've probably seen the news that Dubai raised US$5 billion in the second tranche of its US$20 billion bond program.
Much is being made of the fact that it secured funding this time from the "private sector" and didn't have to rely on help from the Emirate of Abu Dhabi.
Last time I looked the majority owner of both National Bank of Abu Dhabi and AlHilal Bank was the ADIC (Abu Dhabi Investment Council).
Isn't this pretty much what happened with Tranche #1?
Abu Dhabi didn't actually directly purchase the bonds from Dubai. The Central Bank of the UAE did (the first US$10 billion.) Of course, with money given it by Abu Dhabi.
Abu Dhabi didn't actually directly purchase the bonds from Dubai. The Central Bank of the UAE did (the first US$10 billion.) Of course, with money given it by Abu Dhabi.
To characterize Tranche 2 as a non Abu Dhabi Government private sector deal is a bit of a stretch. Well, maybe more than a bit.
And when you think about it, if you're Abu Dhabi, isn't it better to have the CBUAE or NBAD/AlHillal fronting your money? It's a lot easier for a Sheikh Mohammed to stiff a brother ruler than it is the central bank or two financial institutions.
And when you think about it, if you're Abu Dhabi, isn't it better to have the CBUAE or NBAD/AlHillal fronting your money? It's a lot easier for a Sheikh Mohammed to stiff a brother ruler than it is the central bank or two financial institutions.
Aabar Raises US$1.6 Billion Six Month Club Loan
Aabar disclosed to the Abu Dhabi Exchange that it had raised a US$1.625 billion six-month club loan from a group of international and local lenders.
Looks like a bridge to a capital markets issue or perhaps a syndicated loan.
Bahrain Islamic Bank Denies Market Rumor That Investment Dar Intends to Sell Its Shares to Repay Debts
Today Bahrain Islamic Bank issued a statement to the Bahrain Stock Exchange regarding a market rumor that The Investment Dar intended to sell its shareholding interests in Bahrain Islamic as part of its settlement of existing debts.
BIsB stated it had contacted TID and TID had denied.
BSE announcement here in Arabic.
BIsB stated it had contacted TID and TID had denied.
BSE announcement here in Arabic.
Aref Announces KD12.6 Million Judgement in Its Favor Against The Investment Dar - Investment Dar Replies
Aref Investment Company issued an announcement on the Kuwait Stock Exchange that the court had ruled in its favor in its case against TID and awarded it KD12,644,771 (US$44,256,699).
[9:33:4] ِ.صدور حكم لصالح مجموعة عارف الاستثمارية
يعلن سوق الكويت للاوراق المالية بانه ورد الينا الان من شركة مجموعة
عارف الاستثمارية بانه تم صدور حكم لصالح الشركة فى الدعوى رقم
ِ2009/47000 تجاري كلي 9 ،ويفيد الحكم بالزام المدعي عليها (دار الاستثمار)
بان تؤدي للمدعية (مجموعة عارف الاستثمارية) مبلغ وقدره 12,644,771 د.ك
والزمتها بالمصاريف .
وعليه سوف تعاد الشركة الى التداول بعد عشر دقائق من نزول الاعلان .
And TID issued its own KSE announcement in reply: this is only the first round (first level court) and that they will lodge an appeal with the Court of Appeals. By lodging an appeal, TID will stay enforcement.
[12:25:40] ِ.ايضاح من دار الاستثمار بخصوص الحكم الصادر ضد الشركة
يعلن سوق الكويت للاوراق المالية ،بان شركة دار الاستثمار افادت بخصوص
الاعلان المتعلق بالحكم الصادر فى الدعوى رقم 2900/4700 ت.ك/ 9
المقامة من شركة مجموعة عارف الاستثمارية ضد شركة دار الاستثمار ،
افادت الشركة بان ذلك الحكم هو مجرد حكم ابتدائي صادر من محكمة اول
درجة وغير قابل للتنفيذ اذ ان حجيته مؤقتة وتزول بمجرد الطعن عليه
بالاسئناف ،حيث ستقوم شركة دار الاستثمار باسئناف الحكم سيما وان ذلك
الحكم لم ينظر دعواها الفرعية المرتبطة بهذه الدعوى .
وافادت الشركة بانها سوف تقوم بموافاة ادارة السوق باى مستجدات مستقبلية
بهذا الخصوص .
Coming on the heels of the report of less than a brilliant meeting Tuesday by the Creditors' Co-Ordinating Committee, this is another bit of bad news for TID as it will embolden other creditors in the "no" camp.
The Investment Dar - Dissension in Creditor Group?
AlQabas has a fairly negative report on this Tuesday's meeting of the Creditors' Co-Ordinating Committee with lenders.
Here's a quick recap for those who don't read Arabic, plus a few opinions.
- The restructuring plan is a five year term with increasing principal repayments: 6% in the first year, 10% in the second, 12% in the third year. There also seems to be some accommodation to be made to small creditors, though the nature of that arrangement is not specified. AA: This leaves 72% of the loan to be repaid in the last two years. Fairly typical in a difficult situation. Banks structure a deal to restore the loan to performing status - those all important interest payments with a bit of principal reduction - in the near term. After a couple of years of the borrower making those (easy) contractual repayments, a restructured loan can be considered performing and no longer need be reported in IFRS-based financials as restructured. And, perhaps more important, as long as contractual interest and principal payments aren't past due (usually 90 days), the loan is performing from a regulatory standpoint. No need for provisions or non accrual. So with a repayment schedule like this, the hope is that things will work out in the future (a miracle). Or failing that those later maturities can be extended later. Another benefit is that loan officers can present a five year restructuring to credit committees. Both can then pretend the loan tenor is only five years, when it may really need to be seven or more. Today everyone can be happy. The future day of reckoning hopefully will be the problem of some other chap at one's bank. In other words push the difficult bits of the problem to the future. Extend and pretend. Or if you're an "Islamic" banker, delay and pray. I'm guessing the "deal" for small creditors is designed to secure more positive votes for the restructuring proposal rather than a sudden burst of conscience.
- The plan is to get the approval of 66% of the creditors to declare effectiveness. Legal advisors to some creditors are quoted as saying that the Committee Spokesman is either ignorant of or ignoring the law. 100% of creditors need to sign up. If 100% don't sign, then those who have not agreed remain free to pursue legal action. AA: Usually by now, especially in a difficult situation, banks have decided that their best course of action is to "go along" even if they don't believe. At this point usually there are some small creditors looking to get bought out by refusing to vote yes. The absence of a Chapter 11-like legally enforceable cramdown on dissenting creditors makes this a viable strategy. 100% is required for the deal to proceed. The small creditor hopes that if he is difficult enough, the bigger lenders with much more at stake will want to avoid recognizing a big loss, and so will buy him out. But I think there is more going on. What I think we're seeing here - assuming this article is correct - is that there is a significant group of creditors (at least 34%?) who don't want this deal. That view is bolstered by the article mentioning two lenders - one with claims of KD20 million (US$ 70 million) and another with KD30 million (US$105 million) who are in the "no" camp. An indication that major lenders not just small ones are opposed. You'll remember (if you read this blog) my earlier comment about Wakala transactions perhaps being "outside" a rescheduling as they are "trust" transactions not deposits. Perhaps, these lenders hold such obligations and feel confident of a favorable legal outcome.
- The article also states that a large number of attendees at the creditors meeting (the word "aghlabiya" is used) complained about a long-winded boring presentation and useless details in the presentation of the plan. So much so that they are reportedly going to ask for detailed information in writing so they can study. AA: Usually these meetings turn out to be mini circuses (minus the bread) with lots of lenders speaking, many sadly who have little idea about banking or law. And many with less than helpful ideas. It is no fun being the chairman of such a meeting. Again there appears to be more going on. What I'm taking away from this comment is that there remain substantial differences among the lenders about the way forward. And if lenders lack confidence that the Co-ordinating Committee is up to the job, that is not a recipe for progress.
Taking the article at face value, I would expect the deadline is going to have to be moved into next year. Lenders apparently still need to be persuaded that this is the best deal and that failure to accept it means they will lose more than if they sign up. If by now they are not convinced, a lot more work will need to be done to persuade them. With upcoming holidays, not much chance of making the 23 December deadline.
TID has yet to release its 2008 fiscal report. Each day longer it is still in the water, the harder it will be for it to restart its engines and earn enough to pay banks back. And even if it does, it may be left fundamentally wounded by this delay. While banks have a responsibility to their stakeholders to get their money back, they also have a responsibility to the borrower not to needlessly damage it.
TID has yet to release its 2008 fiscal report. Each day longer it is still in the water, the harder it will be for it to restart its engines and earn enough to pay banks back. And even if it does, it may be left fundamentally wounded by this delay. While banks have a responsibility to their stakeholders to get their money back, they also have a responsibility to the borrower not to needlessly damage it.
We may be getting near the time to consider rescheduling under the Financial Stability Law.
The Investment Dar - Apparent Good News in the Noor Investment Co Lawsuit
AlQabas also reports that TID has issued a press release (not yet on their website) that they Court of Appeals has ruled in TID's favor.
Noor had earlier filed a case charging TID's chief executive (Adnan Musallam) and executive management with criminal behavior. The Appeals Court has reportedly upheld the judgment of the lower court which rejected Noor's case.
It seems that now TID will return the favor by suing Noor's management for raising ibelous and untrue accusations and sue for damages to their reputation.
British Bankers Ask UK Govt for Help on Saad and AlGosaibi
Thomas Harris, Chairman of the British Bankers Association Trade Policy Committee, reportedly wrote to the UK Minister for Trade, Lord Davies, urging him to push the Saudi authorities to help foreign banks (read "British banks". This is the BBA after all) resolve their problems with both Saad and AHAB.
Frank Kane has more details on the letter in Abu Dhabi's The National. And he is a bit less gentle. The FT has more to protect that The National.
Clearly, the leak of this letter is designed to put pressure on the Saudi Government.
First reaction.
It's fairly typical for bankers who have gotten themselves into trouble to seek to identify those responsible for their predicament. For some strange reason, they rarely look close to home. Rather they blame regulators, accountants, the weatherman, and the chap standing on the corner for their misfortune. Equally, it's typical for them to look for governments, central banks, and regulators to extricate them - usually justified as needed to protect the good name of the country and future business. We're seeing a bit of the latter in this letter: a not so subtle threat that if the authorities fail to "assume responsibility", then future business will suffer. Not a highly credible threat as bankers are known as a group to be congenitally pre-disposed to ADD.
But added to that normal pattern of behavior are a few other complicating factors:
- The side deal cut to favor local banks. A Saudi preferential tradition so it seems if the stories about Redec are correct.
- Lenders' knowledge that the Saudi legal system presents formidable obstacles to redress through the courts, particularly for foreign lenders. It's remarkable how laser-like the focus is on legal matters after the problem has occurred. It's not just punters in the equity market who are often irrationally exuberant. Many times it's those presumedly sober pin-striped bankers.
- As well, their knowledge that securing full and frank information will be difficult.
- Both borrowers' apparent attempts to use the above and their financial difficulties to settle their obligations for pennies on the dollar.
Certainly, a difficult situation, particularly when the sums involved are large. And clearly they are. The BBA is not writing letters to Lord Davies because the sums are modest.
One wonders (or at least AA does) how many times a person or a banker has to get hit in the head before he or she catches on.
Commercial banking is a fairly simple business. A key element is understanding the market one is doing business or proposes to do business in - well before one looks at the credit of an individual obligor. If there are fundamental problems with the law itself, the enforcement mechanism, business practices, transparency etc, there is a problem with the market. If that is the case, one adjusts one's lending strategy - amounts, terms, collateral (offshore of course) - or simply does not lend.
Tuesday 24 November 2009
New Feature At Suq Al Mal: Links to Blogs and Other Sites
I've started the process of adding links to other websites, which I think are of interest/useful. These are on the right hand side of the page right below "What is Suq Al Mal?"
If anyone out there has any suggestions for additional listings, post a comment.
I'll take a look at the website you recommend. If I think it's worthwhile, I'll include it.
Tie Your Camel First, Then Trust in God - Success - Part III
Tamweel has refused to take delivery of villas in AlMazaya Development due to lack of infrastructure.
There's nothing like a recession to spark a bit of common sense in business.
Who Else Will Miss the Special Security Bus at Doha Airport?
It's nice being special.
I wonder if Ambassador LeBaron could check out the in-flight entertainment on Qataria, particularly the selection of songs from Kawkab AlSharq. If there isn't a TSA regulation on this, there should be.
And You Thought You Had a Bad Day: Wait Till You Hear the MD at Shabka Holding Kuwait
Nayef AlEnizi who recently acquired a majority of Shabka's shares and is MD and Board Member described the company to AlQabas using the phrase "la wujud laha nihaiyan". "No existence to it in the final analysis".
If that wasn't enough:
- The company has no office.
- The new board can't locate records or financial statements.
- The company doesn't have a finance director.
- The new board isn't sure what the assets or liabilities are. (See #2 above)
- The Ministry of Commerce is delaying issuing certificates to the new board members,
And if that weren't enough, he expects that the company will lose the suit brought against it by International Leasing.
And I thought the chap at Safat Global had a sad story to tell. This one tops Badr's by a kilometer or two.
As you recall, trading in Shabka shares is suspended for being late with its financials as well as not paying its KSE listing fees.
Monday 23 November 2009
Oman to the Rescue: Sand Shipments Arriving in Bahrain - Formation of OSEC Near?
Picture in Public Domain as Per WikiCommons
While intensive exploration for sand in Saudi Arabia continues, Bahrain has begun importing Omani sand.
And it seems testing other countries' sand to determine if they have the quality required.
Can the formation of OSEC (the Organization of Sand Exporting Countries) be far distant?
Three Kuwaiti Banks Take Legal Action in Saudi Against Saad and AlGosaibi
AlQabas reports that three Kuwaiti banks have engaged Saudi legal counsel to commence legal action in Saudi Arabia against AHAB (AlGosaibi) and Saad (Maan AlSanea).
This was after negotiations in which the borrowers demanded "exorbitant" reductions in debt. The banks felt they have a strong legal position and were unwilling to settle their debts for less than the deal given the Saudi banks especially since they believe that the borrowers can repay more than what they have offered. (AlQabas did not identify the three banks).
You'll recall the earlier press reports that Saad and AlGosaibi were offering to settle for 8.6% of their debts. Here's an earlier post.
I suspect this is the first reaction to that offer. And a way to ratchet up the negotiating heat on the two borrowers.
As for the favorable side deal cut for the Saudi banks, a similar thing was done long ago during the Redec rescheduling (Ghaith Pharaon) - where some Saudi Government receivables were used to reduce Saudi bank loans.
EmiratesNBD Exposure to AlGosaibi and Saad - Around US$350 Million
Khaleej Times reports.
And not a big deal for EmiratesNBD in terms of any real harm.
At 30 September 2009, the Bank had AED 32. 3 billion (US$8.8 billion) in shareholders' funds. And had earned AED 3.2 billion (US$897 million) for the first nine months of 2009 - even after increasing loan loss provisions 163% to AED 2.0 billion from AED 0.7 billion in the corresponding period in 2008 (Note 7).
Sunday 22 November 2009
Aref Investment Group 3Q09 Financials - Summary in Arabic
Also for those with an interest. Source again is the Kuwait Stock Exchange.
[11/18/2009-8:25:50] بلغت (خسارة)(عارف) (55) مليون د.ك لل9 أشهر المنتهية في 30-09-09
يعلن سوق الكويت للأوراق المالية أن شركة مجموعة عارف الاستثمارية (عارف)
افادت بانها حصلت على موافقة بنك الكويت المركزي على بياناتها
المالية المرحلية للفترة المنتهية في 30-09-09 أمس الثلاثاء الموافق
ِ17-11-2009 ، وفقا لما يلي:
البند ال3 أشهر المنتهية في 30-09-09 ال9 أشهر المنتهية في 30-09-09
الربح(خسارة)(د.ك) (17.071.117) (55.091.556)
ربحية(خسارة)السهم (فلس كويتي) (16) (52)
اجمالي الموجودات المتداولة - 330.465.773
اجمالي الموجودات - 780.859.321
اجمالي المطلوبات المتداولة - 366.552.204
اجمالي المطلوبات - 491.865.414
ِ اجمالي حقوق المساهمين - 245.081.571
بلغ اجمالي الايرادات من التعاملات مع الاطراف ذات الصلة مبلغ 2.918.745 د.ك
بلغ اجمالي المصروفات من التعاملات مع الاطراف ذات الصلة مبلغ 5.150.301 د.ك
ِ2- الفترات المقارنة :
البند ال3 اشهر المنتهية فى 30-09-08 ال9 اشهر المنتهية فى 30-09-08
الربح (د.ك) 12.141.478 39.627.332
ربحية السهم (د.ك) 11 50
اجمالي الموجودات المتداولة - 323.139.772
اجمالي الموجودات - 752.925.572
اجمالي المطلوبات المتداولة - 220.832.086
اجمالي المطلوبات - 379.557.786
اجمالي حقوق المساهمين - 329.508.905
وعليه سوف تعاد الشركة للتداول اعتبارا من اليوم الاربعاء الموافق 18-11-09.
[11/18/2009-8:25:50] بلغت (خسارة)(عارف) (55) مليون د.ك لل9 أشهر المنتهية في 30-09-09
يعلن سوق الكويت للأوراق المالية أن شركة مجموعة عارف الاستثمارية (عارف)
افادت بانها حصلت على موافقة بنك الكويت المركزي على بياناتها
المالية المرحلية للفترة المنتهية في 30-09-09 أمس الثلاثاء الموافق
ِ17-11-2009 ، وفقا لما يلي:
البند ال3 أشهر المنتهية في 30-09-09 ال9 أشهر المنتهية في 30-09-09
الربح(خسارة)(د.ك) (17.071.117) (55.091.556)
ربحية(خسارة)السهم (فلس كويتي) (16) (52)
اجمالي الموجودات المتداولة - 330.465.773
اجمالي الموجودات - 780.859.321
اجمالي المطلوبات المتداولة - 366.552.204
اجمالي المطلوبات - 491.865.414
ِ اجمالي حقوق المساهمين - 245.081.571
بلغ اجمالي الايرادات من التعاملات مع الاطراف ذات الصلة مبلغ 2.918.745 د.ك
بلغ اجمالي المصروفات من التعاملات مع الاطراف ذات الصلة مبلغ 5.150.301 د.ك
ِ2- الفترات المقارنة :
البند ال3 اشهر المنتهية فى 30-09-08 ال9 اشهر المنتهية فى 30-09-08
الربح (د.ك) 12.141.478 39.627.332
ربحية السهم (د.ك) 11 50
اجمالي الموجودات المتداولة - 323.139.772
اجمالي الموجودات - 752.925.572
اجمالي المطلوبات المتداولة - 220.832.086
اجمالي المطلوبات - 379.557.786
اجمالي حقوق المساهمين - 329.508.905
وعليه سوف تعاد الشركة للتداول اعتبارا من اليوم الاربعاء الموافق 18-11-09.
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