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Tuesday, 6 April 2010

Loehmann's says fulfilling financial obligations

Off-price clothing chain Loehmann's denied a report in the New York Post on Tuesday that it had missed a $6 million interest payment on its debt last week.

The Post, citing sources close to the situation, also said suppliers to the company were holding back shipments due to its deteriorating financial situation.

"The premise of today's New York Post story is patently untrue. Loehmann's has fulfilled its financial obligations to its business partners and specifically, has made its debt interest payment on time, as scheduled," Loehmann's Chief Executive Jerry Politzer said in a statement.

Top Credit Suisse M&A banker quits for Qatar fund

Top Credit Suisse M&A banker quits for Qatar fund | Reuters

One of Credit Suisse's (CSGN.VX) top bankers in the Middle East has left the investment bank to join Qatar Holding, the investment arm of the country's sovereign wealth fund, sources said on Tuesday.


Anthony Armstrong was in charge of Credit Suisse's mergers and acquisitions division for the Middle East and North Africa from January 2009 until January 2010. He will be responsible for M&A at Qatar Holding.

A spokeswoman for Credit Suisse said Armstrong had been replaced by Erwin Van Der Voort, who has been with Credit Suisse since 1994. Qatar Holding is the investment arm of Qatar Investment Authority, one of the largest sovereign wealth funds in the world with an estimated $60 billion or more in assets under management.

Kuwait's NBK interested in Turkey's Garanti

Kuwait's NBK interested in Turkey's Garanti, Kuwait Banks, Banking & Investment - Maktoob Business

Kuwait's largest lender, the National Bank of Kuwait (NBK) said on Tuesday it was considering buying a stake in Garanti Bank as Turkey was one of the emerging world's most attractive banking sectors.

"NBK wants to expand in Turkey, a country that has a lot of potential," said NBK's chief executive, Ibrahim Dabdoub, in an e-mailed statement. "We need to have a stronger presence there," said Dabdoub. "One of the options is a share in Garanti Bank."

General Electric said in February it would sell its 20.85 percent stake in the Turkish lender, currently valued at $4.3 billion.

Gulf Shares Gain, Led by Bahrain, on Oil and Bank Stake Sale

Gulf Stocks rose, led by Bahrain and Abu Dhabi, as crude oil traded near a 17-month high and Al Tamdeen Investment Co. planned to sell a stake in Ahli United Bank.

Ahli United, Bahrain’s largest lender, surged to the highest level in more than a year. Al Tamdeen Real Estate Co., which owns a majority in Al Tamdeen Investment, increased to the highest in five months as it said it will make a profit of 50.3 million dinars ($174 million) from the sale. Emirates Telecommunications Corp. gained 1 percent. Bahrain’s All Share Index climbed 1.3 percent to 1,594.96, the highest close in six months. Abu Dhabi’s ADX General Index advanced 0.4 percent.

Crude oil rose 2.1 percent yesterday and traded at $86.64 a barrel at 3:13 p.m. in Dubai. U.S. service industries expanded in March at the fastest pace since May 2006, indicating the country’s recovery may be spreading beyond manufacturing and starting to create jobs. The U.S. is the world’s largest energy consumer.

Rivalry and differences between Saudi and UAE

Competition for roles in a planned monetary union has brought to the open rivalry between Saudi Arabia and the United Arab Emirates, the Gulf Cooperation Council's (GCC) two biggest economies.

The UAE quit the monetary union plan last year after heads of states chose Riyadh as a location for the bank, dealing a blow to a plan that has been languishing since 2001.

The appointment last week of the Saudi central bank governor at the helm of the monetary union's top authority may be for only a one year term but the move may further reduce prospects for the United Arab Emirates and Oman to return.

Suwaidi Says U.A.E. Banks Have Enough Liquidity for Economy

United Arab Emirates banks have enough liquidity to meet the economy’s needs, said Sultan bin Nasser al-Suwaidi, the governor of the country’s central bank.

“The situation of liquidity and deposits in the banking system is normal and compatible with the economy and its needs at the moment,” Suwaidi said today in an interview in the Sudanese capital, Khartoum. “The banks lend when there is demand, when there are big projects that require a lot of financing,” he said.END

Dubai to Cope With Debt After Assistance, DIFC’s Saidi Says

Dubai can manage its debt after receiving financial assistance and because of access to funds originally allocated for infrastructure projects, said the chief economist of the Dubai International Financial Centre.

“The financial assistance from the central bank and Abu Dhabi means Dubai is not under specific pressure when it comes to its debt,” Nasser Saidi told reporters in Dubai today.

The central bank, the Abu Dhabi government and two Abu Dhabi-based banks pledged $20 billion last year to support Dubai’s companies after global credit crisis cut access to funds. The bulk of the emirate’s budget is no longer spent on infrastructure projects, freeing up funds to deal with its debt, Saidi said. Five years ago, the sheikhdom spent more than 60 percent of its budget on infrastructure development, he said.

$490m fraud allegation at Dubai Islamic Bank « ArabianMoney

$490m fraud allegation at Dubai Islamic Bank « ArabianMoney

The former chief executive officer of the Dubai Islamic Bank was yesterday accused in a Dubai court of concealing a fraud leading to a loss to the bank of $490 million.

Local prosecutors have charged seven suspects, five businessmen and two former employees of the bank, of defrauding the bank of $490 million between 2004 and 2007, according to the report carried in Gulf News today.

Fraud allegation

The stunning revelation came as a part of a defence statement by the famous Dubai counsel Dr Habib Al Mulla, and the case is now adjourned until May 3rd. But whatever the outcome of this case the spotlight is surely now thrown on the scale of this alleged fraud.

Agility Desperate to Settle with US Government

Agility, once an undisputed star of the Kuwait SE, has been suffering from a vicious financial death spiral initiated by fraud accusations from its biggest customer: the US government. It all got started crumbling in mid-November 2009 when Kamal Mustafa Al-Sultan acted as a whistleblower and filed a lawsuit against Agility which was later charged with fraud and conspiracy alleging that it overcharged the U.S. Army on $8.5 billion worth of contracts to provide food to soldiers in Iraq, Kuwait and Jordan. The indictment is a big deal since it prevents Agility from bidding for US government contracts during the legal proceedings which constitute 75% of its EBIDTA (Cheuvreux estimates). Needless to say, Agility’s shares took a severe dive by more than 50% from the peak and failed to recover. Lacking further contracts and clear outlook, the company has been laying-off employees during the past few months. Shares of Agility currently trade at 600 fils and haven’t crossed the 700 fils barrier since the fraud accusations.

Agility is definitely desperate to settle with the US government. There were several attempts to postpone the court, but no settlement has been reached yet with the US government. Reports suggest that the U.S. authorities want Agility to pay up to $750 million for the settlement. This sum is far-fetched for Agility as the company’s current market capitalization stands at approximately $2 billion. Kuwaiti daily newspaper Al-Jarida suggests that Agility wants to pay between $300 million to $500 million in compensation. Pending reaching a settlement, Agility requested a trading halt on its shares and permission from the Kuwait SE to delay the release of its financial results until Tuesday. Further Al-Jarida elaborated that negotiations were around a schedule for repayment and circulated on whether Agility will get new contracts with the U.S. military.

There are fears Agility doesn’t reach settlement and it loses on 75% of its EBITDA for a while as court cases take long durations to finally unfold. T here is a desperate need for settlement, but how much is a good deal or a bad deal?

Dubai Electricity & Water Said to Meet Bond Investors

Dubai Electricity & Water Authority plans to meet with bond investors in Asia, Europe and the U.S. this week, according to two people familiar with the matter.

The company hired Citigroup Inc., Standard Chartered Plc, Royal Bank of Scotland Group Plc and National Bank of Abu Dhabi PJSC to arrange the meetings, the people said, asking not to be identified as details are private.

State-owned DEWA said on March 2 it may raise $1 billion to $1.5 billion in the second quarter by selling bonds. It would be the first Dubai government-owned entity to tap bond investors since Dubai World roiled global markets in November by proposing a freeze on loan repayments.

US wants Kuwait's Agility to pay $750m for fraud

US authorities want Kuwaiti logistics firm Agility to pay up to $750 million (Dh2.75bn) to settle fraud charges but the company hopes to pay less, a Kuwait newspaper said yesterday.

Arabic language daily Al Jarida, citing unnamed sources, said Agility wants to pay between $300m to $500m in compensation. Agility officials could not immediately be reached for comment. The Kuwaiti firm, formerly Public Warehousing KSC, is in talks to resolve an indictment accusing it of overcharging the US Army on supply contracts in Iraq, Kuwait and Jordan.

The company has delayed the release of its financial results until today and requested a trading halt on its shares, pending clarity on talks to reach a financial settlement.

Yesterday, Al Jarida said the two parties were negotiating a schedule for repayment and whether Agility will get new contracts with the US military. A second Kuwaiti newspaper, Al Anbaa, quoted unnamed sources as saying that if talks between Agility and the US do not reach a settlement this week, the case will go to US courts.END

Tenancies fall on Dubai's main corridor

Sheikh Zayed Road in Dubai once had one of the highest occupancy rates for office buildings in the city. Now, more than half of them lie empty in the metropolitan corridor.

Office rents fell by as much as 45 per cent in the first three months of the year compared with the previous quarter as more office buildings were delivered to the already over-supplied market, says a report from Cluttons, the international property broker.

Only the Dubai International Financial Centre and the free zone TECOM had occupancy levels above 90 per cent, while office buildings on Sheikh Zayed Road were dealing with an average 60 per cent vacancy rate, Cluttons said.

Fraudsters to face tougher sentences

A landmark court ruling yesterday is likely to have implications for all officials charged with fraud in the emirate and may lead to harsher sentences.

The Dubai Court of Cassation upheld the conviction of the former chief executive of Sama Dubai’s Lagoons project and his sentence of three years in prison for accepting bribes after he was tried as a public official.

Abdel Salam al Merri had previously been tried, and acquitted, as a private employee.

Bribe Case Focuses On Negotiator for Alcoa

U.S. and U.K. prosecutors are investigating a prominent Canadian businessman for criminal money laundering and bribery as part of a two-year investigation centering on Alcoa Inc., the metals giant, according to people familiar with the matter.

The prosecutors have unearthed new documents that they believe show the involvement of Victor Dahdaleh, a longtime agent of Alcoa who helped negotiate contracts with companies in the Middle East and elsewhere, according to the people familiar with the matter.

No charges have been filed against Mr. Dahdaleh, a Canadian citizen in his 60s who lives in London. His lawyer declined comment.

Dubai wealth fund buy-out head switches to Carlyle

Carlyle, the US-based private equity group, has poached Eric Kump, head of Dubai International Capital’s European private equity team, leaving the sovereign wealth fund with a troubled portfolio and lacking funds for new deals.

Mr Kump will on Tuesday be unveiled by Carlyle as a new managing director in its European buy-out team, only two years after the 39-year-old was hired by DIC from Merrill Lynch to bolster its London office.

The move is a blow for DIC, which has not completed a new European buy-out for more than two years, focusing instead on defending the €1.8bn ($2.4bn) it has invested in six deals since it was founded in late 2004, many of which are struggling.

OK Creditors, this is Nakheel and once we bring him back from the dead he'll pay you off in full. Nurse,Set the charger to $8 billion: CLEAR! (Re-post)

My apologies, friend readers, for my extended absence. I have been engaged in an alien activity called “working.” But that’s all done with now and I can turn my attention back to the goings on in Dubai.

So it seems that the equity and credit markets have decided that the Dubai World proposal was “better than expected” and have roared their approval by taking prices higher, particularly of the Nakheel Sukuk. The prime causes for celebration are the fact that Dubai World beat its own deadline, making its announcement on the 25th, and the simple fact that there was an announcement and a more or less detailed outline plus a conference call was vastly more transparency than has come out of Dubai regarding this since the whole crisis began back in November. So gratifying was the transparency that the Citibank report on the subject was entitled “Dubai Restoring Confidence Sooner than Expected.” For people voting with their dollars in the credit and equity markets this seems to be the case. The question I have to ask is, is that confidence justified?

The terms of the deal are interesting in themselves. As I mentioned in my earlier note, this is a Dubai only show. Dubai basically converts all the money that it has previously lent to both Dubai World and Nakheel into equity, putting the other creditors ahead of itself. A noble gesture, this. It then drains the DFSF, putting $8 billion into Nakheel and $1.5 billion into Dubai World. The Dubai World creditors will be invited to roll their loans out into new ones with maturities of 5 and eight years. The repayment of the principal of these loans will be from operating earnings and asset sales.

The Nakheel proposal is the more complex and more interesting one because it has a lot more moving parts. So $8 billion goes in and immediately $1.5 billion goes to continue work on existing developments with the hope that this will unlock additional payments from off plan buyers and that buyers of developments which are “long term” (ie they will never be built) will be willing to swap their claims into projects that may actually exist. Trade creditors under 500k AED are paid off in full and those over 500k AED will get 40% cash and 60% in a tradable security. Sukuk holders will be paid off on time and in full. Bank creditors will be asked to roll their debts but with market interest rates. DFSF will equitize its loans.

Despite the intricate plan and the cash behind it there remain a few questions. Dubai has been obtuse in discussions of whether any further support will be forthcoming or whether any guarantees are being extended. Many details about the tradable security are left to the imaginations of the creditors and the bankers. Also no mention is made of what interest rate, if any, the extended Dubai World debts will pay. And of course on top of these questions rests the $23 billion question of whether the creditors will accept this deal.

The question I would be asking if I were a Dubai World creditor would not be about the interest rate or about the tradable security. I would be asking why they were going about it this way? It would seem to me that if the tools in the tool box that Dubai could deploy were debt forgiveness through equiziation and a willingness to completely drain the DFSF then this seems a pretty odd way to deploy the capital. I’d think they would be better off putting Nakheel into liquidation in order to rescue the creditors at the parent company level would have been optimal. They could have simply defaulted on the Nakheel sukuks and then handed the worthless collateral over to the bondholders. They could have put whatever projects have been completed but not pledged and the remainder of the land bank up for auction and then paid out the proceeds to the trade creditors and the bank lenders and if anything was left over for them they could have passed it up to the parent. If they had done this then they would have been able to devote an additional $8 billion to Dubai World or rather would have had to conduct $8 billion fewer asset liquidations.

Instead what the restructuring plan represents is a “Hail Mary” pass to try to resuscitate Nakheel. The theory seems to be that if they pump the lions’ share of the remaining DFSF funds into Nakheel they can get some of the Dubai Waterfront projects off the ground. The idea must be that then it can be made into a going concern that will enable them to pay off the sukuks, the Nakheel Bank creditors and pass funds up to the parent and pay off the holders of the new five and eight year bonds with the mystery interest rate. There’s probably more to it than that. Dubai has become an Islamic financial center for it to become the site of the largest Islamic default in history is probably not a good idea. Also there seems to be a disproportionate amount of attention being paid to the well being of the people who own off plan real estate in Waterfront, what are the chances that these are largely Emiratis? Pretty good I would say. How about the trade creditors? Probably the same, it’s probably also the case that Arabtec’s new owners, the same guys who filled up the DFSF in the first place, are probably also big fans of the consideration being shown to the Nakheel trade creditors.

From this perspective I wonder how the creditors of Dubai World at the parent company level feel. Under different discount and interest scenarios Merrill Lynch estimates that the Dubai World creditors will take a $0.32-$0.55 cent on the dollar loss under this restructuring. If you were such a creditor how would you feel about Dubai pouring $8 billion into Nakheel, an entity which has an absolutely atrocious operating history, has been involved in all manner of shady dealings most of which will never come to light and which has already swallowed billions and billions of dollars. Fine, they’ve replaced the chairman of Nakheel though he remains the Chairman of Dubai World but they’ve replaced him with another Emirati whose chief qualification is almost certainly his willingness to toe the party line as well.

Then you have to ask yourself what is the business proposition into which this $8 billion is being poured? The idea behind it is that a profitable return can be generated on another new massive real estate project in Dubai. I find this almost impossible to believe, it’s as if the people in charge of this thing have not read a Dubai newspaper in the past 18 months. Dubai real estate has fallen off a cliff. Most property holders in Dubai are just trying to stay out of jail for not bouncing checks and now the DFSF is interested in pouring $8 billion into Nakheel in order to add another Hong Kong to an already collapsing real estate market? And if you are a Nakheel 2011 sukuk holder or a Dubai World holding company creditor like it or not this is the bet you have on, because if it doesn’t work you don’t get paid. If you had a choice would you take that $8 billion and invest it in Dubai real estate or would you just pay yourself with it and call it a day?

I guess we’re going to find out what the creditors think. There may be more transparency but it’s just revealing a different drama.END

Dubai Pearl bets on market revival

Dubai Pearl is a project buried deep in the consciousness of residents of New Dubai, a vibrant district of high rises and villas nestled between the Palm Jumeirah development and Jebel Ali, the emirate’s main port and industrial zone.

For years road signs have pointed drivers to an undeveloped circle of land, sandwiched between the area’s education and media parks, where the $4bn project is supposed to take shape.

But when the Al Fahim Group took over the scheme in 2007 from the Omnix Group, the former owners, the original plans were redesigned. It began preparatory works only in late 2008 – just as the full impact of the economic crisis in Dubai was emerging.

Briton fights $501m Dubai bank fraud claim

A British defendant in Dubai’s biggest fraud case made an impassioned speech on Monday rejecting charges of defrauding $501m as a court heard final statements.

Charles Ridley, who along with six others is accused of defrauding Dubai Islamic Bank, quoted from the Koran as he implored the court to take into consideration a restructuring agreement he signed with the bank in August 2007 to reschedule loans of $501m (€370m, £330m), a legally binding document he said settled the charges and removed the potential for legal claims against the co-defendants.

Dubai’s prosecution claims that Mr Ridley, a Bahrain-based businessman who was arrested in 2008, and his partner Ryan Cornelius abused their positions as representatives of CCH, a trade finance company, by misusing funds lent to CCH by DIB and counterfeiting receipts of false deals.

A wary world weighs Libya’s rich prospects

There was a particularly telling moment at an international business conference held in Tripoli last week.

The organiser, an executive of a western company, welcomed participants and told them it had been the most challenging forum he had ever staged. It was, he said, even more difficult than a Beirut conference he had been involved in that was to be attended by a Lebanese prime minister, only to be blighted by a bomb scare.

There are no bomb scares in Libya, the oil and gas-rich North African state ruled by Colonel Muammer Gaddafi for 40 years under his tight grip and a peculiar system of Islamic socialism. Indeed, security is one of the country’s stronger points. But it is not hard to understand the problems of the conference organiser.