Global Investment House looks to divest non-core assets as part of restructuring and debt repayment as it is hit by substantial losses (BY IFN)

Global Investment House looks to divest non-core assets as part of restructuring and debt repayment as it is hit by substantial losses

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KUWAIT: Global Investment House (GIH), a Kuwait-based Shariah compliant investment firm whose activities include asset management, investment banking and brokerage activities, is looking to implement a financial restructuring plan which will see the separation of the group’s core fee businesses from its non-core principal investments as it seeks to repay up to KWD490.1 million (US$1.73 billion) in debt. The investment company, whose shares will be delisted from the Kuwait Stock Exchange this week, on the 19th June, has established special purpose entities (SPEs) for the purpose of the restructuring; whereby the majority of the group’s principal investments and real estate assets outside of its existing core fee business will be transferred to an Asset SPE which will be managed by GIH “at arm’s length”. Following that, new shares will be issued to another SPE which will then own 70% of Global Investment House. According to the group’s unaudited financial statement for the 31st March 2013 which was released yesterday, the restructuring aims to make GIH a “debt-free company” through the transfer of its existing debt obligations to these SPEs with no recourse to the parent company; as it actively pursues the implementation of its financial restructuring plan. It also listed principal investments, group treasury and real estate, comprising the parent company’s investments and funds in private equity and quoted securities, equity trading in GCC, MENA and other emerging markets and sale and purchase of real estate and property development as businesses to be discontinued following the restructuring. The restructuring agreement entered between GIH and its bondholders and bank lenders on the 4th December 2012 have also included its KWD50 million (US$176.55 million) bond issue dubbed “2013 bonds” and its KWD45 million (US$158.89 million) bond issue called “2012 bonds” in the liabilities which have been directly associated with the disposal group up for sale. The major portion of the group’s debt, which comprises of new multicurrency, conventional, Islamic and bilateral facilities amounting to KWD485.34 million (US$1.71 billion) was incurred in December 2009 when the company entered into a formal restructuring agreement with a group of 53 banks and financial institutions for a bailout package to avoid defaults arising from the 2008 crash. The failure to repay these facilities within its three-year timeframe was what spurred restructuring talks in 2012. The company incurred a loss of KWD11.45 million (US$40.43 million) for March 2013, compared to KWD4.92 million (US$17.37 million) in the corresponding period last year. Its accumulated losses stood at KWD86.75 million (US$306.32 million) while deficit attributable to equity holders of the parent company stood at KWD38.99 million (US$137.67 million) at the end of March. In its financial statement, GIH said: “The ability of the group to continue as an ongoing concern is dependent on implementation of the financial restructuring plan, continued support from shareholders and future profitability which is dependent on adoption and implementation of the financial restructuring plan.” However, it also said that the group is encouraged by the progress of the restructuring talks.