Gulf Finance House (GFH) says it will sell its stake in Bahrain Financial Harbour to Emar Bahrain as it seeks to reduce its debt burden. In a statement to the Bahrain Stock Exchange, GFH said the sale of about 50 per cent was valued at US$262 million (Dh962.3m), comprising $40m in cash and land. The announcement of the sale is part of a plan by the Islamic investment bank to cut expenses by divesting itself of non-core assets. The funds will help GFH repay a $300m loan.
Analysts have valued GFH's stake in Bahrain Financial Harbour, a waterfront development, at about $175m. GFH said last month its net loss for the first three months of this year had shrunk to $7.5m from its net loss of $37.7m for the first quarter of last year. The achievement is more pronounced when compared with the results in the final quarter of last year, when the company reported a net loss of $607m, including provisions, and a $32m operating loss.
"We continue to work hard to improve our underlying performance," said Ted Pretty, the acting chief executive of GFH, in a statement with the earnings report. "We have been focused on reducing our operating costs and meeting our debt commitments ? Our objective is to ensure that we are well placed as the global markets improve." The Bahraini investment bank had announced plans to raise $420m from asset sales to enable it to cut costs.
As part of an effort to reform its business model, it said it would also lay off workers and consolidate its space in Bahrain Financial Harbour. GFH had to cope with steep losses last year after the property-fuelled boom in the Gulf crashed as credit dried up. GFH is in the middle of a sweeping reorganisation under Mr Pretty. In March, the company reached an agreement with creditors to delay the repayment of a $100m Islamic loan. It has also reached an agreement with a syndicate of 32 banks on the $300m loan.
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