Investors hoping for clarity regarding Agility's dispute with the US department of justice may have to wait a little longer.
New US indictments fresh blow for Agility
Investors hoping for clarity regarding Agility's dispute with the US department of justice may have to wait a little longer. The US authorities issued new indictments yesterday against two of the company's subsidiaries, DGS Holdings and DGS Logistics. It was not immediately clear whether the indictments contained fresh charges, but investors did not take the news well.
Agility shares ended 7.8 per cent lower, dragging the Kuwait Stock Exchange 0.8 per cent down, its biggest fall in eight weeks. The company's stocks did not trade on the Dubai Financial Market, where they are cross-listed. "The uncertainty surrounding their deal with the US government will continue to hurt Agility shares. They have performed negatively and will continue to do so," said Kareem Murad, a transport analyst at Shuaa Capital in Dubai.
"Investors are wondering what's in store for them next," Mr Murad said. Agility, previously known as the Public Warehousing Company, was indicted in November for allegedly overcharging the US department of defence over multibillion-dollar food supply contracts, mainly in Iraq, Jordan and Kuwait. The company is the top food supplier to the US military in the region. It has denied the allegations. In a statement on the DFM website, Agility said that it was in discussions with the US government but noted there was no guarantee that the parties would reach "a mutually agreeable settlement".
Agility shares rallied on Monday when it announced a 22 per cent rise in fourth-quarter profit and proposed a dividend of 40 fils per share, despite the ongoing legal troubles. It did not include any provisions that could be used to pay the US government in the event of a settlement. Keith Edwards, the head of asset management at the Doha-based investment company The First Investor, said the lack of provisions showed "some hubris on the company's part".
Agility shares have declined 45 per cent since the original indictment in November. * with Reuters @Email:email@example.com