Global Investment House, the Kuwaiti investment firm that defaulted on its entire loan portfolio last December, said yesterday that it will sell its 14.1 per cent stake in Bahrain's Salam Bank by June 9.
The firm said the lowest price it was willing to accept was 140 Bahraini fils per share, which according to Reuters would net the firm a profit of about $22.3m (Dh81.8m), which it plans to book in the second quarter.
The sale came as no surprise. Global has been in trouble for some time as it struggles to pay off large debts and reverse a string of losses that have been greater than the firm's cumulative profits
since 2001.
Global, along with many of Kuwait's largest investment companies, has taken a bigger hit during the financial crisis than similar firms in other GCC countries. Last month, Investment Dar, another Kuwaiti investment company, said it had defaulted on payment of a $100m sukuk as it worked to restructure its debt.
So will the Salam Bank sale be enough to cure Global's ills?
Well, to put it into perspective, Global lost $241m in the first quarter of this year, and lost $1.36bn
in the fourth quarter of last year. Compared to its cumulative losses
in the prior two quarters, in other words, a $22m profit doesn't look
like much. Actually, it represents just 1.4 per cent of those losses.
Still,
the move does show that the firm continues to take active approach
towards rearranging its finances and modifying its business strategy in the face of
daunting economic circumstances. When it reported its 2008 financials,
revealing its first-ever loss, it said it would embark on a
cost-cutting programme, work to restructure its debt and focus on its
fee-generating businesses, which have proven profitable even during the
downturn. Last December, Global also sold a 14.7 per cent stake in BBK,
another Bahraini bank, taking a loss of $47.7m.