Gulf Finance sees terms for $100m loan by July

Gulf Finance House, the Bahrain-based investment bank, aims to reach an agreement with creditors by early July on renegotiated terms for a $100 million loan as the lender seeks more time to implement its new business plan.

“We remain very confident we can smooth our liquidity requirement over the next two to three years,” Chief Executive Officer Ted Pretty said in a telephone interview today. Pretty was in London where he’s meeting with a group of 32 creditors.

The bank’s presentation of its restructuring package was “well received” by lenders along with its plan to change its business model to develop Islamic financial services, Pretty said. Gulf Finance said Feb. 10 it repaid a $200 million loan to the group of 32 lenders led by German bank WestLB AG and refinanced another $100 million through a six-month facility.

The global financial crisis cut liquidity and lending, while Middle East property prices slumped, hurting investors in real estate projects in the region. Gulf Finance House took a $300 million non-cash charge and cut liabilities by $290 million after exiting its investment in Dubai’s Dubailand development.

The company had focused too much on infrastructure and real estate investments and aims to shift to cash-generating financial services projects, Pretty said. Gulf Finance House would invest in new businesses and seek to profit from management fees from Islamic finance businesses, he said.

The company today said it continues to make progress in its recovery plan and toward its aim of returning to profitability. The lender is cutting debt and working to improve cash liquidity by selling non-core assets and reducing costs, Pretty said in an e-mailed statement earlier today.

“Our counterparties have confidence in Gulf Finance House’s ability” to repay debt and implement its new business plan, Pretty said today. The lender has about $350 million in debt outstanding.