Agility slumped as much as 7.5 per cent yesterday in Kuwait after a US Court ruled against the company's attempt to avoid prosecution on charges for defrauding the US Army in Iraq.
Agility loses ground after US court ruling
Agility declined as much as 7.5 per cent yesterday after a US court ruled against its attempt to avoid prosecution over charges it defrauded the US army on contracts worth billions of dollars.
The Kuwaiti logistics company has been accused of overcharging the US army on supply contracts over a 41-month period by a total of US$9.8 billion, the US government claims. Agility denies the charges.
The ruling is expected to allow the fraud case to proceed after more than a year of legal wrangling over an indictment served by US prosecutors in 2009, according to Reuters.
Agility was not available to comment. Shares of the logistics firm closed 5.9 per cent lower yesterday. The stock has lost almost a third of its value this year. Agility had argued in Marchthe legal action was invalid because prosecutors served the indictment only on the company's US unit and not on the parent company, Public Warehousing Company Agility, which is based in Kuwait.
"If there is an indictment or penalty, we don't know what that penalty will be," said Kareem Murad, an analyst at Shuaa Capital in Dubai. "If that happens, there will be financial implications on the company. Moreover, the company already lost the contract with the US Army, which was a major contributor to its profitability, accounting for almost 48 per cent of Agility's revenues."
The US government filed a lawsuit in January in addition to the criminal indictment. The cost of defending the actions and the possibility of having to pay a penalty are weighing on Agility's finances.
According to a report published by Al Mal Capital in March, Agility has debt repayments of up to 75 million Kuwaiti dinars due through to the end of next year. The company has projected operating cash flow of 91m dinars this year and 106m dinars next year.
Agility provides integrated supply-chain and logistics services in the GCC region.
It is the largest warehousing and logistics operator in the GCC by market capitalisation. It comprises three main business groups: global integrated logistics; defence and government services; and infrastructure.