Gulf Finance House has repaid two thirds of a US$300 million (Dh1.1 billion) Islamic bank loan and refinanced the rest in the latest debt workout involving a major corporation from the region. The Bahrain-based Islamic investment bank said it would repay the remaining $100m in six months. The accord came out of talks in London with a panel of 32 creditors led by WestLB, a German bank with a large presence in the Middle East.
It follows moves to delay repayments on some $1.7bn of debt at Kuwait's Global Investment House while Investment Dar, another Kuwaiti company, is close to completing a $3.5bn debt restructuring. Dubai World, the conglomerate with interests from ports to property, seeks to delay repayments on about $22bn of debt. Companies across the region have been forced to delay payments on billions of dollars of debt while increasingly risk-averse banks have been reluctant to issue new loans, leaving companies with little prospect of raising new debt to pay off maturing borrowings.
"This agreement is indicative of lenders' confidence in GFH's business model, its ability to generate sustained revenue and return to profitability," said Esam Janahi, the chairman. "We are happy with the agreement, which shows the confidence in the strong financial position of Bahrain." Gulf Finance House reported losses of $124.4m through the first nine months of last year as deals dried up and economic conditions worsened in the region. The company, which is listed on stock exchanges in Bahrain, Dubai, Kuwait and London, has yet to report full-year results for last year.
Cost-cutting and sales of "non-core" assets have been central to GFH's strategy to return to profitability. It also raised $300m from shareholders last year to strengthen its balance sheet. Investors appeared to welcome the news as the company's stock gained 1.8 per cent yesterday to close at Dh1.11 on the Dubai Financial Market. "The more you give clarity to people, the better the assessment of risk-reward and the more investors are comfortable with the underlying assets." said Jamil Hallak, the head of credit trading at Standard Chartered in Dubai.