Kuwait's Global wins backing for restructuring

Investment firm hopes move will be significant step in ending its financial troubles
Kuwait's Global wins backing for restructuring
(Photo for illustrative purposes only)
By Reuters
Mon 26 Nov 2012 06:15 PM

Kuwait's Global Investment House secured backing from the majority of bank creditors for its restructuring on Monday, a move the debt-laden firm hopes will be a significant step in ending its financial troubles.

The Kuwaiti investment company and asset manager, undergoing its second debt restructuring in three years, may be able to implement the plan as soon as next week if it wins the approval of a High Court of Justice in London scheduled for December 3.

The restructuring, which applies to around $1.7bn, was approved by creditors representing 96.7 percent by value and 90.9 percent by number at a meeting in Dubai earlier on Monday, a company filing to the London Stock Exchange said.

It will be the first time a Kuwaiti company has used the courts of the United Kingdom to implement a debt restructuring, said a Kuwait-based banker, who was not party to the deal.

Global, if it wins approval, can force opposing shareholders to accept the restructuring proposal. Kuwaiti law requires that all the shareholders must agree a restructuring plan.

Dissenting shareholders could still appeal any ruling in a Kuwaiti court, arguing that UK law does not apply in the Gulf Arab state, a Dubai-based lawyer said, who asked not to be named because he was not authorised to speak to the media.

Global was one of several Kuwaiti investment firms hit hard by the global financial crisis, having used short-term debt to invest heavily in local real estate and stocks whose values subsequently slumped. The firm laid off 17 percent of its staff to cut costs, sources said in January.

Under the proposed restructuring, Global plans to create two special purpose vehicles (SPV), one of which will hold company assets, along with debt, worth $1.3bn.

The other vehicle will take part in a capital increase for the parent company, in which Global will offer KD122.2m ($433m) of new shares to creditors, leaving them owning 70 percent of the investment firm.

Global is due to hold a shareholder meeting on December 2 to ask for approval to delist from the Kuwait Stock Exchange - where it has not traded since December 2011 after breaching accumulated losses limits - as it has not secured a waiver from the country's regulator exempting it from rules requiring it to offer new shares to existing shareholders first.

Bondholders also backed the plan, the company said on Sunday, having halted payments on debt worth 95 million dinars to allow for the restructuring of bank debt to take place.

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