By Andy Sambidge
Investment firm says it will seek shareholder approval to delist from Kuwait Stock Exchange
Kuwait's Global Investment House said on Sunday it was planning talks next month on a possible delisting from Kuwait Stock Exchange in a bid to complete its $1.7bn debt restructuring proposal.
Global, which is undergoing its second debt restructuring in three years after being buffered by the global financial crisis, said it will hold an extraordinary general meeting on Sunday December 2 to discuss the move "if the continuity of listing represents an obstacle to the rescue plan.
The company said in a statement: "Global has saved no efforts to implement the proposed restructuring plan while retaining its listing on KSE.
"However since it is unable to obtain an exemption from the Capital Markets Authority to rules of the mandatory offer, it is inevitable for the company to take measures such as the delisting from KSE in order to preserve the public interest of the company and safeguard the rights of its existing shareholders."
Earlier this month, it was reported that three of its creditors had failed to back the $1.7bn debt restructuring plan and that it was looking at legal options to secure a deal.
Global shareholders approved in September a plan to create new special purpose vehicles that will carry the company's debt.
Like a number of Kuwaiti investment firms, Global's business and its investment portfolio were hit hard by the financial crisis, with real estate and stock valuations plummeting and investor confidence drained as a result.
It initially agreed a $1.7bn restructuring in 2009 but, in September 2011, asked bank creditors to suspend payments under the plan to allow talks for a further reorganisation.
As an ex-Global employee, I commend Ms. Maha Al Ghunaim (Chairperson and MD) and Mr. Bader Al Sumait (CEO) for their amazing efforts and incredible PR skills to keep Global standing amidst all the financial turmoil and economic crisis going on in the region. Just like any other investment firm, they are suffering due to improper valuation of assets and funds which witnessed a strong decline the past two years. The problem with Global is that most of the senior people are trusted though all they know how to do is to push for being board members of portfolio companies and cash in riduculous undeserved salaries of USD30k and above and throw all the work on their subordinates. However, cost cutting strategy was implemented on the low paid staff in terms of less coffee, tissue, travel expenses, allowances, and lay offs. I wish top management rectify this and realize most of their seniors are not crucial to the company survival, whereas it is the little people that keep Global on its feet.
This is normal in corporate world. Ivestors and Owners ideally should avoid repeating mistakes. It would be great to know how often magegers make the same mistake again!
In Warren Buffet's words - In other words investors can always buy toads at the going price for toads. If investors instead bankroll princesses who wish to pay double for the right to kiss the toad, those kisses better pack some real dynamite. We've observed many kisses, but very few miracles. Nevertheless, many managerial princesses remain serenely confident about the future potency of their kisses, even after their corporate backyards are knee-deep in unresponsive toads." (Warren Buffett from the 1981
Berkshire Hathaway Annual Report)