The photo shows the facade of Global Investment House head office
Global gets full backing for $1.7 bln restructuring plan Kuwaiti firm plans to create two SPVs

KUWAIT CITY, Dec 5, (RTRS): Kuwait’s Global Investment House said on Wednesday it had secured the full backing of its creditors for its $1.7 billion restructuring plan. The investment company and asset manager, undergoing its second debt restructuring in three years, will separate its core fee business from other parts of the company which would be spun off into special purpose vehicles (SPV) under the plan. 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 later slumped. Under the restructuring, Global plans to create two SPVs one of which will hold company assets, along with debt, worth $1.3 billion. The other vehicle will take part in a capital increase for the parent company, in which Global will offer 122.2 million dinars ($433 million) of new shares to creditors, leaving them owning 70 percent of the investment firm.

Global’s business after the deal will include asset management, investment banking and brokerage operations, it said in a statement. Shares in the company were suspended from trading in Kuwait last December after the company accumulated losses exceeding 75 percent of its capital. On Sunday shareholders approved the delisting of the stock from the bourse. As previously announced, the restructuring transaction envisages the separation of Global’s core fee businesses from its non-core principal investments and a related transfer of debt obligations, that would result in Global becoming a substantially deleveraged company.

After the transaction, Global’s core business will comprise the existing asset management (approximately $3.5 billion assets under management), investment banking and brokerage businesses. The majority of non-core principal investment and real estate assets will be transferred to newly created “Asset SPE(s)”. Existing shareholders will own approximately 30 per cent of Global and the balance of approximately 70 per cent will be owned by a special purpose entity (“SPE”) for the economic benefit of financiers. Maha Al-Ghunaim, Chairperson and Managing Director of Global commented: “Today represents a significant milestone for Global and is the culmination of intensive and constructive discussions with our financiers throughout this process. We are delighted to have achieved this successful outcome and by the overwhelming support financiers have shown Global throughout this process. 

“We are extremely grateful for the extra-ordinary efforts of the Co-ordinating Committee of financiers consisting of Abu Dhabi Commercial Bank (the Chair of the Co-Com), Commercial International Bank (Egypt), Gulf Bank, Kuwait Finance House (Liquidity Management House), Standard Bank and Standard Chartered Bank in facilitating signing of this debt restructuring transaction. We endeavour to maximize recovery for financiers and protect and safeguard the interests of all stakeholders in these unprecedented market conditions. I take this opportunity to thank the Company’s shareholders for their continuous co-operation and our financial and legal advisors for all their hard work and efforts towards the success of this transaction”

“We look forward to focusing our efforts on developing the fee-generating lines of our core business, namely the asset management, investment banking and brokerage pillars of the Company, serve our clients and win new business even more effectively.” Arul Kandasamy from Abu Dhabi Commercial Bank PJSC and Chair of the Coordinating Committee of Financiers, added: “The Co-ordinating Committee is highly appreciative of the overwhelming support from financiers that has allowed for this successful outcome today. Global’s senior management team has displayed proactivity, professionalism and transparency throughout the process, which have allowed us to structure a unique solution that can serve as a template for other debt restructurings in the region.” “We affirm our continued support of the restructuring transaction and wish the management and Board every success in driving forward the market leading core business lines of the Company.”

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