Adeem Investments Kuwait - Still Hard at Work

Still hard at work improving the website in order to "better serve you".

Since at least 18 November.

It's quite a task apparently.  But well worth the wait, I'm sure.

S&P Nicholas Hardy on Islamic Banking

Here's the S&P podcast link.

Manazel Signs Restructuring Agreement KD43.66 Million (US$152.8 Million)

Manazel announced on the KSE today that one of its subsidiaries Manazel Construction Company had signed a rescheduling with a local bank for KD43.66 million (US$ 152.8 million).  This represents 80% of the debt of the consolidated group.   As of 30 September, Manzel had approximately KD138 million in assets, KD62 million of shareholders' equity, KD 11 million of minority interest and KD 65 million of liabilities.

Here's the KSE announcement:

12:11:10]  ِ.شركة مملوكة ل(منازل) توقع اتفاقية وكالة في الاستثمار لاعادة جدولة ديونها
يعلن سوق الكويت للاوراق المالية انه قد ورد الية الان من شركة منازل ‏
القابضة (منازل) كتاب يفيد بان شركة منازل للتعمير وهي احدى الشركات ‏
المملوكة بنسبة 100% قد وقعت اتفاقية وكالة في الاستثمار لإعادة جدولة ‏
ديونها بمبلغ 43.660.000 د.ك مع احدى البنوك المحلية لمدة خمس سنوات
وهو ما يعادل 80% من اجمالي ديون شركة منازل القابضة .‏

Safat Global Holding Kuwait

If you've been following the investment companies up in Kuwait (and who hasn't?), this name is familiar to you.  Last August the old board was removed and a new board elected by the shareholders.

On 30 September the new Chairman, Badr AlYahya, gave an interview to AlQabas in which he basically said that there was no substance to the company - no offices, no employees, no financial records, and perhaps no assets.

Safat also has been on the list of companies suspended from trading on the KSE due to failure to publish financials.  Both it and Shabka Holding  have not published any financial reports for 2009.  Both share the dubious distinction of being the only two firms also suspended for failure to pay their KSE listing fees.  (And for those who are keeping score, we're down to seven on the suspended list).

AlQabas published an interview with the Deputy Chairman, Ahmad S AlMutairi, in which he said that the company was preparing a formal legal complaint to the Public Prosecutor against the members of the former board of directors and companies they represented for an investigation in the cause for the disappearance of KD 6 million (US$21 million) in real estate assets.  AlMutairi noted the assets were in the audited 2007 financials but were not in the 2008.  (The 31 December 2008 financials about which there is currently some dispute show total assets of just short of KD 10 million).

He also said that the old Board had asked the MOIC to call for a shareholders general meeting and that they were ready to co-operate with the old board to recover the rights of the shareholders.

It's also expected that the meeting (which if I recall properly is scheduled for February) will vote on changing the auditors  and reducing the board to 3 members.

DIFC Guide to Issuing Sukuk

From the DIFC press release.

"The Dubai International Financial Centre Authority today announced the release of the “DIFC Sukuk Guide” - a comprehensive introduction to various sukuk structures, as well as legal and regulatory information on issuing sukuk from the DIFC and listing sukuk on NASDAQ Dubai."

Prepared by Clifford Chance, Amanie Consulting, the DFSA and the DIFC,  "The guide provides detailed descriptions of more than 10 sukuk structures, information on the history and current status of sukuk globally, an overview regarding the issuing and listing of sukuk in or from DIFC, and regulatory licensing in the district."

Here's the link to download a copy.

Warba Bank - Delay in Founding General Meeting to February 2010 - Rationale and Consequences

AlQabas reports that the KIA has decided to postpone the founding general meeting of Warba until February 2010 for a variety of reasons.

1. First, apparently all the requirements for the general meeting and agenda are not yet decided or completed.   The most important of these include the final announcement of the establishment of the bank though a decision of the founding shareholders, appointment of the board of directors, appointment of (financial) auditors as well as Shari'ah supervision committee, delegation of authority to the board to issue fractional shares resulting from the allotment of shares.
   
2. Second, the delay to February 2010 will mean that WB will not have a full 12 month fiscal year in 2010.  Therefore, that it will not be eligible to be listed on the KSE until 2012. since  a new listee must have at least one profitable fiscal year. During this almost two year period, it's expected  that the stock market will recover and the price of the shares will trade at an appropriate level.  Not being listed will also mean that the shares cannot be easily traded, thus, forcing Kuwaiti citizens to hold on to their allocated shares.
   
3. Third, the additional period will allow the new management time to establish the bank -- it will take several long months just to properly set up  the internal organization of the bank.  And as well to  establish a solid track record in line with a boost from the anticipated improvement in the economy the economy.

Agility Announces Loss of SubContract for US Military

Agility informed the Kuwait Stock Market this morning that Dyn Corp International had informed it that it was canceling Agility's subcontract given its indictment on another US Government contract.

KSE announcement here.

[8:47:46]  ايضاح من (اجيليتي) بشأن عقد البرنامج اللوجستي لتطوير الحياة المدنية ‏
يعلن سوق الكويت للاوراق المالية ان شركة المخازن العمومية (اجيليتي) افادت
بان احدى شركاتها التابعة بنسبة 100% وهي شركة اجيليتي للخدمات الحكومية
والدفاع تفيد بانه قد تم وقفها من قبل شركة داينكورب انترناشونال كمقاول من ‏
الباطن لعقد البرنامج اللوجستي لتطوير الحياة المدنية ، والذي كانت الشركة ‏
قد اعلنت عنه في يونيو 2007 ، وتفيد شركة اجيليتي للخدمات الحكومية والدفاع ‏
بانها تؤمن بان هذا الاجراء الذي اتخذتة شركة داينكورب يعد انتهاكا لشروط ‏
العقد بين الطرفين وتقوم الشركة حاليا بالبحث في الخيارات القانونية المتاحة ‏
لها في هذا الشأن.‏

A bit more detail here in an article in the Abu Dhabi newspaper, The National.

Woman First in Abu Dhabi Chamber of Commerce and Industry Elections

Mabruka ya Fatima!

Details here.

Administrative Consolidation in Dubai Government?

Лучше поздно чем никогда

The GulfNews reports.

Dubai World - Off To A Running Start

Unclear which direction though at least per this article.

Ahead of the meeting, expectations fell for a quick resolution due to a Dubai email advising banks not to expect much from the event, and Dubai World moved to characterise the meeting as an "expectation management exercise".

"We got less out of it than we hoped for," said a representative of a European bank.

Perhaps from the unnamed European banker's comment above the expectation management exercise may have been successful after all.

A Well Regulated Militia Being Necessary to the Security of a Free State ...

Or "The Iranians Are Coming, The Iranians Are Coming"

You may pick your favorite slogan.

Details outlined in this court case in Bahrain.

Dubai World's Press Release on Today's Meeting with Creditors

Original text here.

Dec 21, 2009 - 09:04 -

Dubai, 21 Dec. 2009 (WAM) - Dubai World has announced that it today held a meeting in Dubai with its creditor banks involved in the restructuring of the Group's debt. The purpose of the meeting was to provide an update to the banks on the development of the Group's restructuring plans as it seeks to reach a standstill agreement with financial creditors.

Also in attendance were Dubai World's appointed advisers Deloitte, Rothschild and Clifford Chance.

As was confirmed in its statement of December 14th, Dubai World will continue to work with financial creditors to seek a standstill in an orderly way. As long as a standstill is successfully implemented, Dubai World has assurances that the Government of Dubai, through the DFSF, will provide financial support to cover working capital and interest expenses to ensure the continuity of key projects.

Dubai World is committed to working closely with the banks' appointed Coordinating Committee to work towards a consensual solution for the benefit of all lending banks, trade creditors and other stakeholders affected by the restructuring.

International Investment Group Kuwait - Court Case Loss = KD2.7 Million Loss

International Investment Group Kuwait ("IIG") (KSE #215) announced this morning that the Court of Appeals (or more properly for Kuwait Court of Cassation) had ruled against it  on 17 December.  The Court ordered IIG to pay KD3.2 million plus legal interest at 7% from 23 February 2009 (roughly US$11.8 million including about US$0.6 million in interest).  IIG states that as a result it will recognize KD2.7 million (US$9.9 million)  in losses for the final quarter of 2009.

At 30 September 2009, IIG had published losses of KD8.1 million (US$28.4 million).  Total assets were KD135 million (US$473 million) and shareholders' equity KD56.3 million (US$197.1 million).

KSE press release below.   There is also one at the Bahrain Stock Exchange. 

[9:23:5]  ِ.(المجموعه د) تحقق خساره 2.6 مليون د.ك نتيجة صدور حكم ضد الشركة
يعلن سوق الكويت للأوراق الماليه ان شركة المجموعه الدوليه للاستثمار ‏
ِ(المجموعه د) أفادت بأن محكمة التمييز أصدرت حكم بتاريخ 17-12-2009 ‏
في الطعن بالتمييز رقم 990/09 تجاري /4 المرفوع من الشركة ضد أحد الاشخاص
و الذى جرى منطوقه كالتالي :‏
حكمة المحكمه أولا : بقبول الطعن شكلا و في الموضوع بتمييز الحكم المطعون
فيه و ألزمت المطعون ضده المصروفات و مبلغ عشرين د.ك مقابل اتعاب محاماة.‏
ثانيا : و في موضوع الاستئناف رقم 1671 لسنة 2009 تجاري بإلغاء الحكم
المستأنف و القضاء مجددا بإلزام المستأنف ضدها بأن تؤدي للمستأنف عن نفسه
و بصفته مبلغ 3.247.780 د.ك و فوائدة القانونيه بواقع 7% سنويا من تاريخ
رفع الدعوى الحاصل في 23-02-2009 حتى تمام السداد و ألزمتها بالمصروفات
عن الدرجتين و مبلغ ألف دينار فعليه للمحاماة.‏
و تفيد الشركة بأن أثر هذا الحكم على البيانات الماليه للشركة حتى تاريخه
خساره بمبلغ 2.687.495 د.ك سوف يتم ادراجه في بيان الدخل للربع ‏
الأخير من عام 2009 .‏
و عليه سوف تعاد الشركة للتداول بعد عشر دقائق من نزول الاعلان .‏

This court case was one brought by Mr. Hussayn Ali AlKharafi and his son Ahmad against IIG.  This case is not related to the earlier case by the World Islamic Charitable Organization. Nor to the one involving Kuwait Finance House. 

Nor it seems the one involving the Islamic Development Bank.  As a side note, in the IDB case, IIG advised it was in negotiations with the IDB regarding the legal interest applied by the court  to secure a waiver of  "a part of the interest" "due to conflict with Shari'ah principles".  It is unclear to me what the results of the negotiations were.  And how one determines which part of the interest is halal and which is not.

Mr. AlKharafi's charge is that IIG didn't sell a portfolio of stocks in line with his instructions and that therefore IIG is liable.  IIG contended (and presumably still does) that the legal document given by Mr. AlKharafi was merely a proxy or authorization to sell and not an instruction.

Note 25 to the 2008 financials discusses court cases as of that date.

More on IIG to follow.

Warba Bank Kuwait - Update

AlQabas reports that there is great excitement in the Islamic banking community in Kuwait and an apparent rush to the doors of Warba to secure positions, ascribed to the belief that given the KIA ownership stake the bank will have a favored position compared to other banks.

As a keen student of Islamic and other banking, AA personally thinks that many see a position in the new bank as a way to step up the career ladder. 

As one old teacher of AA's once put it:  "It's pretty much an undisputed scientific fact that the most sensitive human organ is the pocketbook".  I don't think he meant that as a complimentary statement though.

Dubai World Restructuring: No Restructuring Proposal Offered No Standstill Requested

Apparently, as per Reuters Dubai World did not formally request a standstill or offer any proposals on the restructuring today.

The latter is not surprising.

What's unclear is precisely what happened at the meeting.

Under best practice, Dubai World would have 

1. Introduced its internal team and external advisors with the goal of conveying a sense of competence and willingness to do business with its creditors in a transparent professional fashion.   
2. And, as is often appropriate (and seems to be the case here), introduce the new senior managers to confirm to the assembly that the ritual sacrifice of old management has been made.
   
3. Outlined its financial position: group structure, overall and subsidiary quantum of debt, debt maturities, asset values, cashflow as a way of framing future discussion over the restructuring.   (If DW and its subsidiaries still don't have an idea of what deal they are seeking at least in broad terms, that is not good.)
4. Requested the standstill.
5. Asked for the formation of a steering committee.
   

A real danger in a case like this is opening the floor for bright ideas.

This is the time for DW to recall that the bright folks who made the loans to them are by and large represented in the august body of creditors that will now decide their fate.  A realization that is perhaps a "la gota fria" moment.

Dubai World Debt Restructuring: Dubai World Statement

Something I missed but worth noting, a statement from Dubai World about Dubai Government support from 14 December.

HE Al Mansouri Denies Erroneous News Reports

As reported by the official news agency of the United Arab Emirates, HE Sultan AlManouri has denied earlier erroneous news reports, which apparently do not include the one that AA quoted earlier today.

"Minister of Economy Sultan Al Mansouri affirmed today that Dubai's debts issue has a local specialty and is being handled by the competent government agencies on contrary to what a foreign news agency has quoted him today saying that ''Dubai, whose debts are matured in 2010, could receive more assistance either from the federal government or emirate of Abu Dhabi."

''A massive media campaign is being waged against the UAE with the aim of distorting facts and misleading the public opinion about the economic reality in the country, the minister said astonishingly.

''This campaign will not touch the economic reputation of the UAE and its vibrant national economy which has proven its merit in handling and managing diverse global economic challenges and changes,''he stressed.

And he noted:

''The UAE is always keen to deal with all situations and circumstances with high transparency and scientifically and well-studied method based on accurate analysis using international state-of-the-art standards to ensure delivery of best aspired results,''he concluded.

AA for one stands corrected, but only mildly astonished.

Dubai World's "Small Debts"

HE Sultan AlMansouri sets the record straight for all the chicken littles out there:

"Dubai World's debts are small and some companies have been saddled with debts more heavier than those of the Dubai group, UAE Minister of Economy Sultan Al Mansouri affirmed today."

And to think I was worried.

Central Bank of UAE - November Banking Statistics

CB UAE has released November Banking Indicators - summary statistics.

Two differences from October:

1. AED 3 billion decline in personal loans. (A 1.4% decrease)
   
2. AED 3 billion increase in specific provisions. (A 10.3% increase).
   

Other metrics, including capital funds, have increased or held steady.  

Capital funds (=capital plus reserves but not including current year profit) increased to AED 217.9 billion from AED 211.7 billion.

The Investment Dar - Extension of Time for Creditor Approval

AlQabas quotes an unnamed financial source that he expects that the Creditors' Co-Ordinating Committee will announce an extension of the deadline for creditors to agree to the restructuring proposal.  At least two weeks perhaps more.

The extension is being justified as needed to complete certain legal requirements and comply with requests from creditors.

Here's my take on the story behind the story:

1. The comment about the completion of certain legal requirements and creditor requests may indicate that some creditors may have imposed conditions on their agreement requiring some changes to the deal, though I think this is just the story to provide cover for an extension without admitting failure in securing creditor agreement.
2. Clearly not all creditors have agreed.  As outlined before, 100% of creditors are required to close the deal.  In an earlier post  on 6 December press accounts, I noted that at that point it seemed that only 66% of creditors (by amount) had agreed. Investment Dar Bank Bahrain at 27%  had not but was expected to agree "soon".  One would think that its agreement would have been trumpeted as a way of building momentum to sweep up the other creditors.  Since this hasn't been announced, it's a safe bet that it hasn't happened.  Though looking at Dubai's PR campaign you might well object that there is a completely plausible alternative explanation.  After all, TID is still running a rather boastful account of its 2007 earnings on its website, which seems (at least to AA) as a bit out of place given its current situation.
   
3. What's telling is the reference in the article to persuading creditors to join who are determined on pursuing their rights through court cases.  An ongoing court case or two could derail implementation of the restructuring as creditors rush to protect themselves.
4. It's now been approximately two weeks since TID submitted its 2008 financials to the Central Bank for approval.  It will be very interesting to see how long before they are released.
   

If the AlQabas story is accurate, this is not good news for TID.

You can access previous posts on The Investment Dar by using the label section on the right side of the Suq Al Mal homepage.