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Wed 10 Feb 2010 04:19 PM

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GFH confirms deal to refinance $300m debt

Bahraini investment bank repays $200m; remaining cash to be paid off in six months.

GFH confirms deal to refinance $300m debt
BIG DEAL: GFH reached the deal through discussions with 32 financial institutions. (Getty Images)

Bahraini Islamic investment bank Gulf Finance House (GFH) has secured a deal to refinance its $300 million syndicated facility, which was due on Wednesday.

As expected, the bank has repaid $200 million and replaced the old facility with a new $100 million murabaha, which has a tenor of six months.

Over the last two months or so, GFH has been hit with three ratings downgrades by Standard & Poor’s (S&P) due to a liquidity position that the agency described as being “under immediate and severe stress.”

GFH reached the deal through discussions with 32 financial institutions - led by German bank WestLB – during which the Bahraini firm elaborated on its plans to increase revenue streams and sell non-core assets.

“This agreement is indicative of lenders confidence in GFH’s business model, its ability to generate sustained revenue and return to profitability. We are happy with the agreement which shows the confidence in the strong financial position of the Kingdom of Bahrain,” said GFH chairman Esam Janahi.

GFH acting CEO Ted Pretty claimed that the bank was only of a very few institutions that had chosen to pay off some of their commitments rather than refinancing their full facilities.

“We believe that the terms of the refinancing provide GFH with the necessary time to execute the comprehensive plan presented to the banks to return to profitability,”  said David Pepper, head of the CEEMEA Syndicate at WestLB.

“The fact that GFH was able to secure unanimous support of the banking group is as a direct result of the pragmatic way in which all parties approached the situation.” 

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