Global seeks $1.7bn bond plan reprieve

Global Investment House opens talks with bondholders as it tries to renegotiate its debts for the second time.

Global Investment House has requested a reprieve from planned bond repayments due next year as it attempts to renegotiate its debts for a second time.

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The troubled Kuwaiti investment bank is due to meet bondholders on December 5 to request repayments of bonds worth 45 million Kuwaiti dinars (Dh598.8m), due in April, be postponed by two months.

Global, once among the biggest investment banks in the Middle East, opened talks with banks in September to renegotiate an original agreement signed in 2009 to modify the terms on US$1.7 billion (Dh6.24bn) worth of debt.

"These modifications are designed to facilitate discussions between Global and its lending banks and bondholders about a more comprehensive restructuring of Global's debt obligations," the company said in a statement to the London Stock Exchange, where its stock is listed. But investors say a drastic revamping of the bank's debts is needed to ensure its survival. An agenda for the meeting obtained by The National said the bank would ask bondholders to defer principal and interest payments, and accept smaller interest payments in exchange for cash sweeteners.

Global's Kuwait-listed shares fell 2 per cent to 48.5 Kuwaiti fils in trading yesterday.

The latest proposal to put bondholders on an even footing would mollify loan lenders, following previous waivers of rights signed with banks, said Ahmad Alanani, the senior executive officer at Exotix, a specialist investor in illiquid debt.

But a more thorough reshaping of the company's capital structure was necessary now the "ambitious" terms of the original restructuring had failed, he added.

"A restructuring of this nature is the only way this company will actually be able to survive as a going concern," said Mr Alanani.

"Anything more aggressive - if lenders try to push for a more aggressive deal - may push the company to default, or we might be back here in four or five years trying to do this again."

Global defaulted on payment of a $200m loan in December 2008 during the global financial crisis, agreeing on a rescheduling of its debts a year later.

However, as market conditions have worsened, the bank returned to creditors in September to seek deferral of debts coming due next month.

A spokesman said therequest announced yesterday was part of a broader restructuring of the bank's debts started in September.

"The ability of [Global] being able to repay its debt was all predicated on the economic environment getting better and asset values returning," he said.

With the world economic recovery grinding to a halt, Global's planned sales of assets could not go ahead, he added.

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