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Kuwaiti investment bank Global seeks debt restructure.

It has not been a great week for KuwaitAAEs Global Investment House. Firstly it has had to admit a definitive need for debt restructure and as if to

emphasise that requirement, losses in the third quarter have widened dramatically.

Talks to modify existing terms on debts of US$ 1.7 billion against an agreement signed in 2009, have been ongoing with GlobalAAEs lenders since

September 2011. Now the company has had to issue a statement to the London Stock Exchange, it is a UK listed entity, to the effect that, "These

modifications are designed to facilitate discussions between Global and its lending banks and bondholders about a more comprehensive

restructuring of Global's debt obligations". However its more candid investors say that a major rework of the bank's debts is fundamentally critical

to its survival.

Meanwhile in tandem with these discussions Global posted a net loss of 15.46 million Kuwaiti Dinars (US$ 55.9 million) over the three months

ending on the 30th of September, analysts calculate. The same period a year earlier, the net loss was 11.8 million Kuwaiti Dinars

(US$ 42.6 million), thus the deficit has expanded by 31.3 per cent.

According to insider sources, Global are asking bondholders to defer full principal and interest payments, which in return for cash inducements will

allow them to go forward with sizably reduced interest payments. The Kuwaiti investment bank previously defaulted on the repayment of a US$ 200

million loan in December 2008 at the height of the global financial crisis; they then made an agreement which rescheduled their debts a year further

down the line.

Debt specialists see the proposed restructure as the only alternative to Global Finance House going under, warning creditors not to be overly

aggressive in their demands, which could well push the bank into default followed by a long drawn out period of settlement. The ailing firm is

scheduled to meet bondholders on the 5th of December to ask for a postponement of repayments on 45 million Kuwaiti dinars (US$ 162.6 million) due

in April 2012, by a further two months.


Copyright Andy McTiernan. All rights reserved.

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Publication:Andy McTiernan Property & Economy Bulletin
Date:Nov 25, 2011
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