Bahrain GFH seeks to extend $200m bond

Islamic investment firm struggled to pay back debt after 2008 regional property crash
Bahrain GFH seeks to extend $200m bond
ABSORB LOSS: GFH plans to slash its paid-up capital by about 75 percent to absorb its losses (Getty Images)
By Reuters
Mon 01 Nov 2010 09:48 PM

Bahrain's Gulf Finance House (GFH) plans to ask holders of its $200 million Islamic bond to extend its maturity by three years as part of its debt restructuring, the company said on Monday.

The Islamic investment firm struggled to pay back its debt after the 2008 regional property crash, and restructured two loans worth a total of about $400 million this year.

A company spokesman told Reuters that GFH is contacting bond holders to ask them to extend the maturity by three years to 2015 from 2012, and that it would offer the same return as under the original terms.

The spokesman said: "This is the final element of getting a really smooth maturity profile in place, so that cash generated over the next years goes into growth."

The sukuk, which offers a coupon of 2.038 percent, last traded at about 56 percent of par, according to Thomson Reuters data, as investors fret over the future of the investment firm that has arranged property projects from Morocco to India.

About $137 million of the original amount is outstanding.

GFH plans to slash its paid-up capital by about 75 percent to absorb its losses, and raise up to $500 million in additional funds through issuing a murabaha, an equity-linked Islamic money-market instrument.

Last month, it reported a third-quarter net loss, which nearly quadrupled to $115.1 million, as the firm set aside more money to meet losses amid shrinking revenues.(Reuters)

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