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Kuwait's Aayan asks creditors to reschedule debts of US$ 588 million.

Kuwait investment firm Aayan Leasing and Investment began a dialogue with creditors to reschedule its

remaining debts back in April 2015. The company's chairman said in comments made at the time, that the

initiative involved a figure of some176 million Kuwaiti Dinars (US$ 588 million).

A number of investment companies in the Arabian Gulf Arab state, Aayan among them, were badly hit by

the global financial crisis of 2008. Constrained access to funding markets meant that it was not

possible to refinance short-term debt, a vehicle frequently used to acquire assets including

property, private equity and shares during boom periods.

These difficult market conditions forced Aayan into a restructure of at least part of its debt

burden, a move that would almost halve the firm's obligations from 333 million Kuwaiti Dinars

(US$ 1.1 billion), as they stood in 2012, to 176 million dinars in 2015.

In comments made at the company's annual general assembly meeting, Aayan chairman Fahd Ali

al-Ghanim, said that rescheduling the remaining debts had become an option "after the central bank

eased rules - compared with 2012 - allowing repaying debts over an extended period of time". However

he failed to specify exactly which central bank regulations amendments he was referring to which

confused analysts.

Nevertheless, despite the tenuous reference to a relaxation of CB rules and the original debt

reschedule figure cited, it appeared that Aayan Leasing and Investment Co had managed to secure a

205 million Kuwaiti Dinars (US$743.6 million) debt restructuring agreement with a contingent of its

creditors, before the end of the second quarter.

According to a statement issued toward the end of May, Aayan signed an agreement with nine

creditors, seven of which were Kuwait headquartered entities, these included Kuwait Finance House, Burgan

Bank and Gulf Bank. Under the agreement, the company is obliged to settle 62 per cent of its total debts

over the next five years, but retains the right to continue to manage Aayan's day to activities as

normal, leaving the firm free to focus on operational activities that will lift revenues.

Director of the board, Ali Al-Ghanem, applauded the positive outcome, describing negotiations with

Aayan's creditors as "hectic". He went on to observe that the rescheduling process had taken longer than

anticipated because of the need for strict compliance with new Central Bank of Kuwait

regulations, supposedly effective from June 2012. Specifically these stipulated proportional finance

levels and limits governing debt average and outer debts, in addition to fast liquidity.

The Aayan director also pointed out that while a reschedule of 62 per cent of the debts was

approved, there were other lenders still to buy into the plan, an option that would remain on the

table until second-quarter close. He went on to say that some of the foreign banks involved were

still planning to participate, but needed further time to finalise due to longer internal approvals


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Publication:Andy McTiernan Property & Economy Bulletin
Geographic Code:7KUWA
Date:Aug 5, 2015
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