By Amran Abocar
Kuwait's Global Investment House cannot scrap $642.5m purchase in UAE bank.
National Bank of Umm al-Qaiwain (NBQ) said on Wednesday that Kuwait's Global Investment House (GIH) has lost a court bid to scrap its deal to buy a $642.5 million stake in the UAE bank, after defaulting on payments.Global, which defaulted on most of its debt earlier this year amid the credit crunch, last year signed a deal to buy a 20-percent stake in NBQ through convertible bonds.
NBQ, in a statement announcing second-quarter earnings results, reiterated the Kuwait firm had paid only $249.9 million of the purchase price and defaulted on the rest.
"GIH filed a lawsuit in this regard and the Court of First Instance rejected on July 21, 2009 the GIH lawsuit due to the existence of an arbitration clause in the two firms' memorandum of understanding,'' NBQ said.
Earlier this year, NBQ's CEO Sheikh Nasser bin Rashid al-Moalla had said that Global could seek arbitration if it wanted to pull out of the stake purchase.
A Global spokesman said on Wednesday the investment bank has decided to scrap the deal because it was not viable amid the global financial crisis, adding that it had only signed a non-binding memorandum of understanding with NBQ.
"We never gave them a firm offer and we never signed a subscription agreement," he told Reuters, adding that the $249.9 million paid by Global to NBQ was a fixed deposit not related to the deal, which the latter has refused to return.
"There is nothing in the MOU that obliges us to pay a deposit before signing the subscription agreement," he said.
Global will appeal the court ruling, he added.
Abu Dhabi-listed NBQ is 30 percent owned by the government of Umm al-Qaiwain, the smallest of the seven members of the UAE federation. (Reuters)