Kuwait's Global eyes capital hike after loss

Kuwait's biggest investment bank says losses on investments, loans caused $884m full-year net loss.
Kuwait's Global eyes capital hike after loss
By Souhail Karam and Rania El Gamal
Mon 27 Apr 2009 05:41 PM

Kuwait's Global Investment House is considering a capital hike after it swung into a loss last year, its chairwoman said on Monday, sending its stock up almost eight percent.Global shares, which resumed trading on Monday after being halted on April 1 because the firm failed to disclose its 2008 earnings on time, closed 7.8 percent higher despite the losses.

"There are several scenarios... One of these options might be increasing the capital," Maha Al Ghunaim told Al Arabiya television, adding that it was up to the shareholders to decide.

Global, which posted a fourth-quarter net loss of KD360.5m ($1.24bn), hopes to reach a deal with its creditors to reschedule debt "very soon" and will ask for state help under a $5 billion rescue plan, its chief executive said.

"There is improvement and advancement when it comes to our agreement with creditors," Bader Al Sumait told Reuters in Riyadh. "All I can say at this point of time, God willing, very soon we'll reach the (agreement)."

Global began talks to reschedule its debt in December, saying it appointed HSBCas an adviser to hold talks with foreign lenders and named Commercial Bank of Kuwait as its local adviser.

On Sunday, the country's biggest investment bank said losses on investments and loans resulted in a full-year net loss of KD257.6m ($884m) compared to a net profit of KD91.4m in 2007.

Global, which defaulted on most of its debt earlier this year, is among the most prominent firms in the Gulf state's financial sector to face trouble amid tight credit conditions.

The problems faced by Global and other investment firms, including major Islamic firm Investment Dar, led the government to approve a rescue package worth KD1.5bn this year.

"The government did invent this programme for companies that need to be under this programme and we will apply," Sumait said.

The stimulus plan includes state guarantees for fresh loans to help investment firms weather the global financial crisis.

Under the plan, the government can also help banks and investment firms trying to raise fresh funds by buying unsubscribed stock in capital increases as it did with Gulf Bank in January.

Ghunaim said the firm had positive shareholder equity and enough reserves to "put out" the losses it made last year.

Total assets reached KD1.25bn dinars, while total debt was about KD790m at the end of 2008, she said.

Global said on Sunday shareholders' equity was KD303.5m at the end of December compared with KD323m at the end of 2007. (Reuters)

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