Global Investment House discloses debt-for-equity exchange plan (By IFN)

KUWAIT: Global Investment House has disclosed details of its debt-for-equity swap that could see the firm cede 70% of its ownership to creditors and write off KWD108.2 million (US$382.78 million)-worth of debt.

In a filing to the Dubai Financial Market, Global, which owes an estimated US$1.7 billion-worth of debt in conventional and Islamic facilities, announced that it will convene an extraordinary general meeting (EGM) on the 2nd September 2012 to approve its debt-for-equity proposal. Its shareholders will also meet on the same day for its annual general meeting (AGM).

In its EGM agenda, Global proposed the cancellation of 17.33 million shares worth KWD11.48 million (US$40.56 million), comprising shares from its paid-up capital account and KWD1.06 million (US$3.75 million) from its treasury shares reserve. It also proposed to transfer losses resulting from the cancellation of KWD8.69 million (US$30.76 million)-worth of treasury shares to its share premium account.

Additionally, Global seeks to write off KWD31.09 million (US$110.02 million)-worth of its accumulated losses against its remaining share premium and write off KWD77.12 million (US$272.47 million)-worth of losses against its paid-up capital.

The kicker however, is its proposal to issue KWD122.24 million (US$431.88 million)-worth of new shares to its creditors, raising its capital to KWD174.62 million (US$616.95 million) in a move that would give creditors 70% ownership in the firm.

“The subscription in the capital increase shall be made in full from the creditors’ account and the company’s existing shareholders waive their pre-emption right to subscribe in the capital increase in favour of a special purpose company (or more [companies]) established for the benefit of the financial creditors and to delegate the board of directors to set the requirements, rules and conditions for the calling of the capital increase,” it said.

In addition, Global has asked its existing shareholders to approve the transfer of part of the firm’s assets and investments to a special purpose vehicle set up for its creditors; provided that the current fair value of the assets and investments do not exceed the amount of its lower liabilities as a result of the transfer.

As at the 31st March 2012, its total assets amounted to KWD550.26 million (US$1.26 billion).

Meanwhile, at its AGM, the firm will seek shareholder approval on a recommendation to withhold bonuses to its board of directors and to freeze dividend distributions for its 2011 financial year. It has also asked shareholders to discharge its board from liabilities relating to their financial and legal actions during that year.

See: http://redmoney.newsweaver.co.uk/1ruwykel3xjh38rwoni3wx?email=true&a=6&p=26596475&t=21811325