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.

Drill, Baby, Drill

CAUSE #1  - Simple Minded Politics

CAUSE #2 - Simple Minded Regulation

By 2003, U.S. regulators decided remote-controlled safeguards needed more study. A report commissioned by the Minerals Management Service said "acoustic systems are not recommended because they tend to be very costly." 

An acoustic trigger costs about $500,000, industry officials said. The Deepwater Horizon had a replacement cost of about $560 million, and BP says it is spending $6 million a day to battle the oil spill. On Wednesday, crews set fire to part of the oil spill in an attempt to limit environmental damage.

That's right an acoustic trigger would have cost BP US$500,000!  Not only did BP not install one, it apparently didn't buy any oil spill insurance.  Perhaps two very strong arguments why one shouldn't rely on the "free market" to provide protection.

EFFECT

Hissa Hilal - New Book of Poetry on Divorce and Women's Rights

According to The National Ms. Hilal's new book. Divorce and Kholu’ Poetry: A Reading of the Status of Women in Tribal Society, Nabati Poetry as a Witness, is stirring up a controversy over whether women had more rights in the 1950's than now.

“Ms Hilal wants to show that women have always had the right to voice their opinions about who they wanted to marry,” he said. “It is an important book for the new generation to read.”

Whether one agrees or disagrees with the central thesis in her book, the important point is to get people thinking about the rights of women.

And perhaps then they'll remember women like  نسيبة بنت كعب  Nusaybah Bint Ka'ab and ask what might have happened if at Uhud she decided that "mixing" with men folk was haram.  

Kuwait International Bank - Board Resignations for Legal Reasons

Today both AlWatan and AlQabas carry a KUNA news report attributed to Shayh Muhammad AlJarrah AlSabah from 29 April.  He explained that the resignations of Fahad Al Ibrahim and Sanaa  Al Juma from the Board of KIB were purely for legal reasons.

He noted that within one month of election Board members must deposit their entire "qualifying shares" with an accredited bank.  The amount required is the lesser of 1% of the total number of shares of the firm or KD7,500 - whichever is less.

Neither Al Ibrahim nor Al Juma managed to do this and so "voluntarily and out of respect for the law" they resigned.  Shaykh Muhammad will be calling upon the "reserve directors" to serve in their place.

This is quite a remarkable story.  And I'm not sure what to make of it.  It's sort of like the old Ripley's "Believe It or Not".

1. Did they buy the shares but the maid knocked the "post it" note  "Deposit shares before 27 April" off the talaja and they missed the deadline?
2. Did the two newly minted directors not know of this requirement?  In which case one might ask about KIB's selection procedures for candidates.  And its post election counseling of newly elected directors.
3. Did the two directors know but just forgot?  Again might this suggest slightly more stringent selection criteria? 
4. Did the two directors know but after sitting in on their first board meeting, decide that even such a modest purchase was an unwise investment? 
5. Did they want to purchase the shares but like many Kuwaitis find they are tapped out with the local bank to finance another purchase?  Perhaps, the Majlis Al Umma's unceasing efforts to relieve the personal loan burden of Kuwaiti citizens have received yet another compelling reason to go forward.

And think of the embarrassment that this notice must be causing the two directors.  I think that officially it should have been said that they wanted to spend more time with their families.  As we all know or should, one's family is quite important in Kuwait.  And then of course there's The Family which some say may be even more important in some cases.  I'm sure there's a family or a Family involved here.

Damas Lenders Extend Standstill Two Months

Damas announced on NasdaqDubai late this afternoon that a majority of its lenders had agreed to extend the standstill two months to give the company time to complete its rescheduling proposal.

29 Apr 2010 - 17:48:58

Damas International Limited (the Company) announces today that the Company has signed an extension to the standstill agreement signed with a majority of its bank lenders.

The standstill agreement which was due to expire on 30^th of April 2010, has been extended for a period of two months in order to allow the Company to finalize its restructuring plan.

The Company is pleased to announce that a majority of its bank lenders have approved the extension which proves once again the confidence of the Company's bank lenders in the strength of the underlying business model of Damas, a Company spokesman stated.

I'm not sure that a standstill is really effective if only a majority of lenders have signed.  All it will take to start a panic is if one lender break ranks.

I'm also not sure that extending the standstill proves anything except the banks feel it is the best way to maximize their recovery.    As noted earlier, the UAE has fairly low scores among the GCC for recoveries in insolvency.  And judging by the last minute timing, it seems that sentiment built "slowly" to a positive response to the company's request.

Boubyan Bank - 1Q 2010 KD1.6 Million Profit

Boubyan disclosed its 1Q10 results on the KSE today (press release below).  KD1.6 million in income versus a KD11/7 million loss om 1Q09.

[9:57:0]  بلغ ربح (بنك بوبيان) 1.6 مليون د.ك لل3 أشهر المنتهية في31-03-2010‏
يعلن سوق الكويت للأوراق المالية أن مجلس ادارة بنك بوبيان (بنك بوبيان)‏
قداعتمد البيانات المالية المرحلية للبنك للفترات المنتهية  في 31-03-2010 ،
وفقا لما يلي:‏
ِ1) الفترات الحالية:‏
البند      ال3 أشهر المنتهية في 31-03-10    ال3 أشهر المنتهية في 31-03-09‏
الربح(د.ك)                 1.620.000                        (11.721.000)‏
ربحية السهم(فلس كويتي)       1.04                                  (8.42)‏
اجمالي الموجودات المتداولة     926.426.596            816.152.664‏
اجمالي الموجودات           1.132.288.218              906.293.972‏
اجمالي المطلوبات المتداولة    894.313.613           773.480.853‏
اجمالي المطلوبات            917.581.930            779.565.379‏
اجمالي حقوق المساهمين       212.745.760          124.376.425‏
علما بأن بنك الكويت المركزي قد وافق على هذه البيانات المالية بتاريخ ‏
اليوم الخميس الموافق 29-04-2010.‏
بلغ اجمالى الايرادات من التعاملات مع الاطراف ذات الصلة مبلغ 1.016.111د.ك ‏
بلغ اجمالي المصروفات من التعاملات مع الاطراف ذات الصلة مبلغ 197.024 د.ك .‏
و عليه سوف تعاد الشركة للتداول بعد عشر دقائق من نزول الاعلان .‏

Tabreed Announces "Postponement" of Extraordinary General Meeting Due to Lack of Quorum

Tabreed announced on the Dubai Stock Exchange that its recent attempt 28 April (the second one) to hold an EGM failed due to a lack of a quorum.  Next meeting will be held 5 May.

Third time lucky?

Dubai Holdings Commercial Operations Group - Delay in Financials

From today's Nasdaq Dubai.

29 Apr 2010 - 09:34:26

Dubai Holding Commercial Operations Group LLC (“DHCOG”) has extended the publication date for its 2009 consolidated financial statements by two weeks until 16 May 2010 as DHCOG has extensively realigned its operating businesses, undertaken a conservative revaluation of its real estate portfolio, and has conducted a thorough impairment testing exercise across all its projects.

These steps have resulted in a slight delay in completing the consolidation process of its financial statements.

The expressions "conservative revaluation of its real estate portfolio" and "thorough impairment testing exercise across all its projects" are unlikely to be accompanied by bumper earnings for 2009.

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.

Golden Belt Sukuk #1 - Vote for Dissolution But Delegate to Take No Action

Citicorp as Delegate for the above transaction posted a notice on the BSE today that at least 25% of certificateholders had voted to dissolve the trust.  That in effect represents a sufficient vote to accelerate the maturity of the sukuk.  That means the issuer is obligated to pay.  As a shell company with no assets, the issuer will not be able to pay.  

At that point, Saad's purchase obligation will be triggered and the debt will become a direct unsecured liability of Saad.  

However, as pointed out in my earlier post, the certificateholders have no legal access to any real assets.  The land being "rented" in this transaction remains legally registered in Mr. Al Sanea's name.  So in effect they hold an unsecured obligation.  That means they will join the ranks of other Saad unsecured creditors - a large group both in terms of numbers of creditors and amount of debt.  That will enable them to take legal action against Saad.

So no guarantee of repayment.

One wrinkle, despite the vote, the Delegate does not have to take any action until it has been indemnified to its satisfaction.  Citicorp advises in the notice that it is not so indemnified.

I suspect the issue is certficateholder agreement to defray the not inconsiderable legal expenses associated with Citicorp taking action.  The issue is one of simple maths for the investors.  Will their ultimate recovery net of legal costs be positive?

Gulf Investment International (Gulfinvest) - Central Bank Gives 3 Months to Raise New Capital

Gulfinvest  (KSE # 226) reported its 2009 earnings on the KSE this Tuesday.  It reported losses of KD42.8 million for 2009.  For 2008 it had reported losses of KD51.8 million.

As a result, its shareholders' equity is negative KD24.8 million.

As required by the Kuwait Commercial Law #15 of 1960 Article 171 when a company has accumulated losses 75% or more of its paid in capital (note this is not total shareholders' equity), the company's Board is required to call an extraordinary general meeting of shareholders so that they can decide which actions to take.  There are two options.  Commence a wind-up or rectify the solution.  The latter can be achieved in one of two ways.  One is to offset the losses against paid in capital and any reserves (share premium, mandatory and voluntary reserves but not fair value reserves).  The other is to raise new capital.  Sometimes a combination of the two is used.

Clearly, GI has more than breached this threshold as it has negative shareholders' equity.

The Central Bank of Kuwait has given GI three months to rectify its situation.  That involves not only extinquishing the accumulated losses but also restoring shareholders' equity to at least KD15 million.   Thus, GI has to raise some KD40 million in capital.

The company has advised that it has hired a financial advisor to help it work out a plan to rectify its problems. 

Solutions being explored are:

1. Getting creditors (roughly KD50 million at 30 September 2009) to convert some of their debt to equity. 
2. Settling debts by transferring assets to creditors.
3. Agreeing a rescheduling with deferred principal repayments and a freezing of interest for some undisclosed period.
4. Raising new capital via an offering.  By law existing shareholders would have first priority rights.

Looks like a tough slog.  A very tough slog.

1. The company only has assets of KD21.9 million.    Of which only KD6.2 million are current. 
2. Current (and total) liabilities are KD46.6 million.  What value there are in KD15.7 million of non current assets is debatable.
3. There doesn't seem much of a franchise here to get existing shareholders to put new money at risk.  As per the info at the KSE, there do not appear to be any institutional shareholders with significant existing shareholding in GI.  The company has a major investment (for it) in Ahlia Holding Company (KSE#206) roughly 30% of AHC.  And it appears GI wrote off a substantial amount of goodwill on AHC for its FYE2009 financials.
4. I'm doubtful that lenders can be persuaded to convert debt into equity.  From GI's 30 September 2009 financial statements, it appears that substantially all assets are already pledged as collateral to lenders.  So if they want the assets, they can foreclose on the collateral.   Taking equity seems a very hard sell.  Why take equity and the expense burden of the company when you can just strip out the (hopefully) cash generating assets and sell them immediately?  Or, if you believe in a value rebound, foreclose and then hang on to the assets for a later sale? 

Here's the KSE announcement (Arabic only).

[4/27/2010-12:29:49]  مجلس ادارة (غلف انفست) يوصي بعدم توزيع ارباح عن عام 2009‏
يعلن سوق الكويت للأوراق المالية بان مجلس ادارة الشركة الخليجية الدولية
للاستثمار (غلف انفست) قد اعتمد البيانات المالية السنوية للشركة للسنة
المالية المنتهية في 31-12-2009، وفقا لما يلي:‏
ِ1) نتائج أعمال الشركة:‏
البند             السنة المنتهية في 31-12-09   السنة المنتهية في 31-12-08‏
الربح(الخسارة) (د.ك)          (42.803.655)          (51.803.468)‏
ربحية (خسارة)السهم(فلس كويتي)  (226.80)               (271.51) ‏
اجمالي الموجودات المتداولة     6.175.257             11.075.184‏
اجمالي الموجودات              21.864.251           68.418.091‏
اجمالي المطلوبات المتداولة     46.630.201          36.217173‏
اجمالي المطلوبات               46.630.201          51.586.977‏
اجمالي حقوق المساهمين      (24.765.950)          16.831.114‏
بلغ اجمالي الايرادات من التعاملات مع الاطراف ذات الصلة مبلغ 27.449 د.ك
بلغ اجمالي المصروفات من التعاملات مع الاطراف ذات الصلة مبلغ 174.348 د.ك
علما بأن بنك الكويت المركزي قد وافق على هذه البيانات المالية بتاريخ
ِ25-04-2010.‏
كما افاد بنك الكويت المركزي انه قد تقرر منح الشركة مهلة 3شهور من تاريخة  ‏
لاتخاذ الاجراءات الازمة لتصويب اوضاعها المالية بإطفاء الخسائر المتراكمة ‏
بالكامل بالاضافة الى توفير رأس مال جديد لا يقل عن 15 مليون د.ك،
وذلك بالدعوة بصفة فورية الى عقد جمعية عامة غير عادية لاتخاذ ‏
القرارات اللازمة في هذا الخصوص اخذا في الاعتبار الوضع المالي للشركة ‏
كما في تاريخ انعقاد الجمعية العامة .‏
ِ2) التوزيعات المقترحة:‏
قرر مجلس ادارة الشركة عدم توزيع ارباح عن السنه الماليه المنتهيه
في 31-12-2009، علما بان هذه التوصية تخضع لموافقة الجمعية ‏
العموميه و الجهات المختصه .‏
علما بان تقرير مراقبي الحسابات يحتوي على الفقرة التوضيحية التالية .‏
ايضاح رقم 2.26:‏
الاستمرارية ‏
تم اعداد البيانات المالية المجمعة في بافتراض استمرار المجموعة ككيان ‏
مستمر وهذا يتطلب دعم مالي من المساهمين على الرغم من ذلك ، ‏
اذا لم تتمكن المجموعة من الاستمرار في حالتها التشغيلية في المستقبل ‏
القريب ، فقد لا تتمكن من سداد التزاماتها ضمن المسار الاعتيادي للاعمال
وبالتالي عدم امكانية استمراريتها .‏
حققت المجموعة صافي خسارة بمبلغ 42.803.655 د.ك للسنة المنتهية ‏
في 31-12-2009 وبذلك التاريخ بلغ رصيد حقوق المساهمين السالب ‏
ِ24.765.950 د.ك ، كما في 31-12-2009 بلغت الخسائر المتراكمة ‏
للمجموعة 43.840.358 د.ك والتي تمثل 226% من رأس المال.‏
نتيجة لخسارة الشركة الام لاكثر من 75% من رأس مالها ووفقا للمادة ‏
ِ171 من قانون الشركات التجارية رقم 15 لعام 1960 ، ينبغي ‏
على مجلس الادارة طلب اجتماع للجمعية العامة غير العادية لتحديد ‏
الاجراء الواجب اتخاذة بموجب القانون . بالاضافة الى ذلك فإن ‏
المجموعة قد بلغت من قبل بنك الكويت المركزي لتصحيح وضع ‏
الانخفاض في حقوق الملكية والتي هي اقل من الحد الادنى 15 مليون د.ك ‏
من اجل مواصلة نشاطها كشركة استثمارية .‏
قامت الشركة الام بتعيين مستشارا ماليا لدراسة الخيارات المتاحة للشركة الام
لاعادة هيكلة حقوق الملكية .‏
بناء على توصيات المستشار المالي ، شرعة الشركة الام في اتخاذ الترتيبات ‏
التالية لتسوية الوضع : ‏
ِ- مناقشة المقرضين الحاليين لتحويل اجزاء من القروض الى اسهم ملكية في ‏
الشركة بالاضافة الى اعادة جدولة المبالغ المتبقية من القروض لفترات مقبلة ‏
مع تجميد مدفوعات الفائدة لفترات اخرى .‏
ِ- استكشاف الخيارات لتسوية اجزاء من القروض المستحقة للبنوك عن طريق
تحويل الاصول المتوفرة لدى الشركة .‏
ِ- مناقشة المساهمين الحاليين لضخ رأس مال اضافي لاعادة تمويل حصة المجموعة ‏
في ضوء الوضع المالي الحالي .‏

Tabreed Announces Deferrment of 19 May Payment on its 2008 Sukuk

In connection with its 1Q10 earnings release, Tabreed announced:

Following a review of alternatives with respect to the annual distribution on its convertible Ijara 08 Sukuk, Tabreed intends to defer making this payment on May 19^th. Deferring the annual distribution is consistent with the objectives of the recapitalization proposal that will be decided upon by Tabreed’s shareholders and reflects the subordinated and equity-like nature of the 08 Sukuk.  Mubadala Development Company and ACWA Holdings, who together represent a majority of 08 Sukuk holders, have expressed their support for Tabreed’s decision.  Tabreed intends to propose amendments to the terms of the 08 Sukuk in due course in connection with its broader recapitalization program that Tabreed is targeting for completion in Q4 2010.

This is yet another sign of the "knock-on" effect from the slowdown in the construction/real estate sector in the UAE.  Also note that a significant portion of 1Q10 earnings are non cash items related to the Sukuk.

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 Real Nick on The Real Estate Sector in Dubai

A comment from The Real Nick to one of my posts that deserves a bit more prominent place here at this blog.

And considering my last few posts, perhaps a new feature here at SAM - informed commentary.

TRN's commentary is immediately below.

The fear of losing face seems to be stronger than reason (nothing new there..). There is no way Nakheel can resurrect the 'vision'. Even if the guy who "wrote [a poem] on water" around Palm Jebel Ali continues to wish it...It's over, and out.

The consolidation may not look brutal to you, from a distance. Here on the dusty ground, it looks scary: Thousands in the real estate and construction have lost their jobs and continue to lose. Contractors have stamina. They'll not shut up shop at the first hiccup but should be able to sustain one or two years without work. Many have done that, but the two years are over now and Abu Dhabi for one hasn't pulled the finger out. Watching AD make decisions is like watching paint dry. Only less fun.
And one has to remember that this industry accounted for way more than 30% of Dubai's economy. My boss, who's been around the Dubai construction /development business for thirty odd years, reckons that we are staring into an abyss of seven to ten lean years (supermodel style lean; anorexic style lean).
You can make this up on your fingers: Add the tidal wave of oversupply which is about to break on our real estate shores and swamp if for years, and the pre-contract (pre-construction) timeline of any new substantial projects of two/three years and then a construction period of three years. I.e to do big things you need 5/6 years and you'd be a fool do start even thinking about anything before 2012/2013 /2014...

Nakheel, khallas!

Global Investment House Strongly Denies Khalid AlWazzan Resignation

As noted by a reader in a comment to my original post, GIH has strongly denied news of Mr. AlWazzan's resignation.

Below is the announcement on the KSE.

[9:5:1]  ِ.(جلوبل) تنفي ما نشر فى احدى الصحف المحلية ‏
يعلن سوق الكويت للاوراق المالية بان شركة بيت الاستثمار العالمي ‏
ِ(جلوبل) تنفي ما نشر فى احدى الصحف المحلية حول استقالة ‏
السيد خالد الوزان من عضوية مجلس الادارة ،وتفيد الشركة بان الخبر ‏
عار عن الصحة جملة وتفصيلا .‏

Burgan Bank Capital Increase

Here's the straight story on Burgan's capital increase regarding the remaining 15% not placed earlier.

Existing shareholders were given the right to subscribe between 13 April and 27 April.

The general public can subscribe for any remaining shares 2 May through 15 June.

And here's a link to a BB Investor Presentation on itself and its strategy.

Idiocy Knows No Borders: Guide Dog Denied Access to Restaurant Due to Imagined Sexual Preference

You cannot make this stuff up.

At least I suppose an earthquake may have been avoided.

Global Investment House - Khalid AlWazzan Resigns from Board

Update 27 April: GIH denies resignation story.  New post here.

AlQabas reports that Khalid AlWazzan is resigning from Global.  He's been on the Board for at least 10 to 12 years - and Vice Chairman for at least 2 to 3.  Ostensibly, stepping down now that the ship has sailed safely through the storm. 

Anyone out there with any thoughts on the reasons for his resignation, please post a comment.

The article also notes that GIH has been negotiating with creditors to participate in its capital raising exercise through a debt conversion.

And that other changes in the Board are expected following the capital raising.  

The Board is currently rather a select group of only five:  Ms. AlGhunaim, Mr. Al Wazzan, Shaykh Abdullah J.A. AlSabah,  Mazouk N. AlKharafi, and Alan Smith (an old China hand).

Gulf Bank - 25% (?) of Loan Portfolio Doubtful

Update 27 April:  A reader has pointed out that I overlooked the collateral held by GB and outlined in Note 26 of the 2008 fiscal year end financials.  "Problem" solved.  Clearly, it really pays to read the entire financial report.

AlWatan carries remarks from Michel Accad, CEO of Gulf Bank, in which he states that 25% of GB's loan portfolio is doubtful of collection.  On the positive side GB has reserves equal to 87% of the doubtful amount.

In discussing 1Q10 results he noted the that the operating results included KD14 million from the sale of the investment portfolio, making GB's recurring earnings about KD30 million, noting that KD25 million  to KD30 million was an expected quarterly run rate.  

He also said that he anticipates that GB won't require provisioning (presumably heavy provisioning) in the second half of the year.

I must confess I don't follow the math here. 

Using 25% doubtful portfolio, GB has heavy provisioning for at least the rest of the year. Unless Michel is referring to only a part of the portfolio.  Using 87% cover also suggests that provisioning will require more than one quarter.  If we assume that devoting 2Q10's projected KD30 million brings provisions to 100%, then doubtful loans are roughly 15% to 16% of the gross portfolio.  I suppose another explanation could be that GB is not targeting 100% cover of doubtful loans.

Here's the analysis.

Since detailed information on the loan portfolio at 31 March 2010 is not available in GB's 1Q10 interims,  we'll have to use Fiscal 2009 data as our analytical starting point.  

At 31 December 2009, GB's gross loan portfolio was KD3.787 billion and Loan Loss Reserve ("LLR") KD0.522 billion.  So net loans were KD3.266 billion. 

At 31 March 2010 the net loan portfolio was KD3.163 billion.  GB added roughly KD43 million to its LLR, thus a reasonable assumptions is that the LLR at 31 March was KD0.565 billion.

If this represents 87% cover of doubtful loans, then doubtful loans are some KD0.649 billion.  However, 25% of Gross Loans (estimated as the sum of  KD3.163 billion net loans plus the LLR of KD0.565 billion) = KD0.932 billion.

Using the lower estimate of doubtful loans of KD0.649 billion, then GB is KD84 million short.  Which would seem to imply provisioning away most of the rest of the year's income using a KD25 million to KD 30 million quarterly run rate.  Obviously with the higher KD0.932 billion estimate, heavy provisions continue into next year.

If we assume one more quarter of provisioning income will do the trick, (as implied by Michel's statement) then that would take loan provisions to KD0.595 billion.  That's more like 15% to 16% doubtful loans.

Anyone out there with an explanation or comment, please post.

Adeem Investment Company - The Work Goes On (and On and On)

The work goes on, the cause endures, the hope still lives, and the dream shall never die.

Since last November.   From the time this is taking, this is indeed a monumental project.  And AIC is working quietly, I can't find a news report at all about them.

Anyone "up North" who can shed some light?