Wednesday, 23 March 2011
"We are discussing it with the relevant authorities. There's no decision so it doesn't make sense to speculate (on a timeframe)," Chief Executive Andre Went told reporters.
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Dubai World finally signs off $14.7bn debt rescheduling but Nakheel deal delayed again « ArabianMoney
After yet another delay last week for the multiple regional crises, state-owned holding company Dubai World has finally signed an agreement with 80 banks to restructure its $14.7 billion debt. The deal was widely anticipated and comes as no surprise to local markets who were first told of the deal last September.
But there was a further delay for the trade creditors of real estate development subsidiary Nakheel who will have to wait until mid-year. Last year Nakheel’s trade creditors were offered 40 per cent cash and 60 per cent in a sukuk bond paying a 10 per cent return. Many are struggling with cash flow problems because of the payment delays, and hope payment will not now slip until after Ramadan.
Bank creditors get $4.4 billion over five years, and $10.3 billion over eight years at a fixed rate of 2.4 per cent. There is no haircut in terms of lost principle but clearly the banks have a write off to make for lost interest.
Qatar Holding, an investment vehicle of the state-run Qatar Investment Authority, raised its stake in Hochtief to above 10% from 9.1%, reducing the free float that Spain's ACS is targeting.
ACS declined to comment on Qatar Holding's move.
Last year, ACS circumvented German takeover rules to increase its stake in Hochtief above 30% without triggering a mandatory offer, which such a move normally would have required it to do. ACS has built a 39% stake in the Essen, Germany-based company and Wednesday repeated its desire to accumulate just over a 50% by the end of the first semester.
In an attempt to fend off ACS, Hochtief late last year launched a capital increase, through which Qatar Holding took a 9.1% stake. The capital increase wasn't open to other shareholders, so it diluted the stakes of ACS and others. However, it turned out to be only an inconvenience to ACS's plans.
WGZ Bank analyst Stefan Roehle expects ACS to reach a majority stake ahead of Hochtief's annual general meeting, which is planned for May 12.
The easiest way of doing so, would be if Qatar Holding would sell its stake to ACS. Ralf Doerper of WestLB said such a move was possible. He added that this would go against Qatar Holding's normal way of doing business, and that it was likely of more interest for the company that Hochtief was well positioned in the Middle East. He noted that ACS was a strong potential buyer.
Qatar Holding, which also has a stake in German car maker Volkswagen AG (VOW.XE), declined to comment. The Qataris previously had said they were neutral about a Hochtief takeover by ACS.
Hochtief isn't the only area of conflict between ACS and Qatar Holding. Qatar Holding is in the way of ACS's plans to gain control of the board of Spanish utility Iberdrola SA (IBE.MC).
Hochtief Wednesday reported a 50% year-on-year rise in net profit in 2010 to EUR288 million as sales increased 11% to EUR20.16 billion, beating analyst forecasts of EUR243 million in net profit and sales of EUR19.26 billion. It hiked its dividend to EUR2 per share from EUR1.50, above expectations for EUR1.70. Traders said there is now less incentive for investors to part with their shares.
Batelco CEO Peter Kaliaropoulos told the Associated Press by email Tuesday that the companies' advisers are currently working on sorting out the due diligence process of examining the unit's books.
Emirati telecom Etisalat dropped its bid for a large stack of Kuwait-based Zain on Saturday. Zain's sale of the 25 percent stake in the Saudi unit that bears its name was necessary for the larger Etisalat deal to go through.
Nakheel, which has been in negotiations with both trade creditors and banks to repay its debt obligations, said it will soon issue restructuring agreements, including a term sheet for an Islamic bond offering, to trade creditors that have signed on to its restructuring plan.
Under Nakheel's restructuring proposal, trade creditors will receive repayment through 40 percent cash and 60 percent in the form of an Islamic bond, or sukuk. It has said that 91 percent of its trade creditors have given the deal a stamp of approval.
FT Alphaville has been keeping tabs on the odd goings-on in Japan-related ETFs recently. And we’ve got another issue to add to our bundle of concerns…
… It’s just how difficult trading in some ETFs has proven to be during the crisis.
As evidence, we cite the latest piece from Paul Amery over at Index Universe. He’s done a sterling job looking at the degree to which bid-ask spreads blew out in certain products and to what degree some market makers shockingly bowed out from quoting and trading the products last week completely (à la echoes of the flash crash).
Take Lyxor’s Japan Topix ETF, the LTPX.
The benchmark EGX 30 Index (EGX30), the world’s worst performing stock measure this year, fell as much as 9.9 percent to the lowest intraday level since April 2009. It was trading 9 percent lower at 5,138.27 at 1:06 p.m. in Cairo. Trading was halted earlier today for 30 minutes after the EGX 100 index lost 7 percent. Orascom Construction Industries, the nation’s largest publicly traded builder, retreated to the lowest since July 2009. Commercial International Bank tumbled 10 percent.
Egypt’s bourse, North Africa’s second-largest after Morocco by market value, resumed trading two days before a deadline that could have led to its removal from the MSCI Emerging Markets Index. The bourse won’t stop trading again today and will allow the EGX 100 Index to drop as much as 10 percent, exchange spokesman Hisham Turk said.
The host city nonetheless stole the show with a phalanx of UAE ministers led by none other than High Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai.
Aramco is the world’s most valuable company, worth somewhere between $US2.2 trillion to $US7 trillion. It announced the signing of the memorandum of understanding (MOU) with PetroChina Company Ltd., a subsidiary of China’s state-owned oil giant China National Petroluem Company (CNPC), to supply some 200,000 barrels of oil a day to the proposed Yunnan refinery that will serve as the endpoint of the trans-Burma Shwe pipeline.
The deal represents a new and very important strategic relationship between the world’s second top oil producer and what is becoming one of the top consumers that was underscored by Khalid A. Al-Falih, president and CEO of Aramco, in its press release:
“We don’t consider ourselves simply sellers of oil to China, but rather strategic partners whose many relationships in that important country are founded on mutual respect, interdependence and mutual benefit.”
"The real estate portfolio aims to achieve good returns on mid-term and long-term, and will benefit from the steep plunge in real estate," KIA said in a statement on Wednesday on the state news agency KUNA.
Kuwait Finance House, the country's biggest Islamic lender, will initially manage the portfolio KIA said, adding that the portfolio would not invest in residential properties.
Javed Ahmad, managing director at BIBD, said the investment makes Fajr Capital the third-largest investor in the bank.
Brunei's government has a 45 percent stake in the bank, while the Sultan of Brunei's charitable foundation owns a 25 percent stake.
Dubai World, in a statement emailed by the Dubai government's media office, said it signed "today a final agreement on the restructuring of all its financial obligations with all creditors."
"According to the new agreement for the restructuring of Dubai World's debt....the group will repay its debts in two phases, the first over five years during which it will repay $4.4 billion, while the rest of its debt worth $10.3 billion will be repayed over a period of eight years," the statement said, adding that the average interest rate will be fixed at 2.4% throughout the loan's term.
The amount covers debt held by banks. The Dubai government holds the group's remaining debt.
The terms of the agreement are "completely fair to all parties," Mohammed Ibrahim Al Shaibani, director general of the Dubai ruler's court and a Dubai World board member, said.
Dubai World, one of the government's flagship conglomerates, in September secured the support from over 99% of its creditors for its debt-restructuring deal, which was finalized a month later, ending more than 10 months of negotiations. The group shocked the financial community in November 2009 when it announced that it would seek to delay payments on its debt pile worth $23.8 billion at the time.
The conglomerate, like other Dubai government-owned groups, built up debts during years of frenzied spending that included some of the world's most extravagant real-estate projects developed by its Nakheel unit--seen to be at the center of Dubai's financial problems--and on the purchase of international properties by investment arm Istithmar World as prices peaked.
"We are optimistic and hopeful of Dubai World's ability to overcome the consequences of the global financial crisis...thanks to a combination of sincere efforts and determined belief in putting this company at the front of a new stage of growth," Sheik Ahmed Bin Saeed Al Maktoum, the company's chairman, said.
Money is the artery of war.
- Peter the Great (attributed)
For a market missing some high-quality Libyan oil and wondering what happens if there’s going to be a long civil war there, here is a highly interesting development.
We think Libya’s rebels now have to a way to access oil cash, and therefore it could also be a way for Libyan oil to come back to the market even if Gaddafi stays on.
The Gaddafi-controlled National Oil Corporation and central bank come under UN sanctions now, making it harder for the Colonel to recycle oil receipts into cash for his armies — but also finally closing remaining outside access to production from these entities.
But what if other entities appeared outside his control?
Notably — here is an odd line in the way the US Treasury is now implementing the UN sanctions. From a statement last night, our emphasis:
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today identified 14 companies owned by Libya’s National Oil Corporation, as subject to sanctions pursuant to Executive Order (E.O.) 13566…
Treasury will continue monitoring the National Oil Corporation’s operations in Libya. Should National Oil Corporation subsidiaries or facilities come under different ownership and control, Treasury may consider authorizing dealings with such entities.
The Egyptian stock exchange has reopened for business on Wednesday morning but not without a hiccup or two.
Seconds after trading commenced the circuit breakers kicked in and the exchange was forced to suspend business.
Several stocks including Telecom Egypt, Commercial International and Orascom Construction fell by more than 10 per cent, prompting the exchange to halt trading for 30 minutes.
RTRS-EGYPT BOURSE SUSPENDS TRADE AFTER BROAD INDEX <.EGX100> FALLS 5 PCT
RTRS-EGYPT BOURSE SUSPENDS TRADE IN SEVERAL MAJOR STOCKS AFTER REOPENING
Everything is back up and running now and the EGX 100 looks to have stabilised around 822 — that’s a fall of 7 per cent. But trading is volatile.
(At Pixel Time showing -8.73%)
The Aa3 issuer ratings have been confirmed following Etisalat's announcement on March 19 that it would terminate the contemplated acquisition. The outlook is stable.
"As Etisalat no longer pursues buying a significant stake in Zain, which had been the driver for Moody's ratings review, we consequently confirmed the ratings at the Aa3 level," said Martin Kohlhase, a Dubai-based Moody's Assistant Vice President and lead analyst for Etisalat. He added that "the uncertainty over the development of Etisalat's capital structure has been removed and with it the pressure on ratings we had initially seen when Etisalat made the binding offer for the Zain assets in November 2010."
Net income rose to $374.8 million from $332.9 million a year earlier, the world’s fourth-biggest port operator said in a statement to Nasdaq Dubai today. That beat the $324.5 million mean of 11 analyst estimates, compiled by Bloomberg. Ebitda margin, a measure of profitability, improved to 40.3 percent in the year from 38 percent in 2009.
Last year “saw a return to volume growth across almost all our terminals,” Chairman Sultan Ahmed Bin Sulayem said in the statement. Traffic at almost all facilities has also returned to or surpassed 2008 levels, “a peak year for the global container terminal industry,” he said.
Concerns have been on the rise that Bahrain's banking sector and its regional status as a financial center may be adversely affected by ongoing domestic political turmoil, which led the country's king to declare a three-month state of emergency last week after Bahraini security forces intensified their clampdown on protests by mainly Shiite demonstrators that have paralysed the local economy.
Saudi Arabia and the United Arab Emirates both have sent troops to help quash the uprising, which has left numerous people dead, as part of a joint Gulf Cooperation Council initiative that has been strongly criticized by Bahraini opposition groups.
Sheikh Saleh Kamel, the chairman of the Jeddah Chamber of Commerce and the Federation of the GCC Chambers, said the kingdom should move to foster unity in the US$1 trillion (Dh3.67tn) Islamic finance industry, in which regulation has become fractured along national lines.
"The fatwa should be unified," he said. The current system of competition among jurisdictions had carried on "to such an extent that we make halal haram, and vice versa".
The question is: what's next in store for oil prices? As was previously the case during the two Gulf wars, the answer depends on politics. The uncertain political scenario has thrown fundamental analysis of supply and demand out of the window.
So far, the prices have not been pushed up by actual supply disruptions. Oil peaked even before the news that some foreign oil companies operating in Libya will cut production"
Egyptian shares tumbled in New York and London yesterday, with the Market Vectors Egypt Index ETF (EGPT), a U.S.-listed fund that holds Egyptian stocks, retreating 5.7 percent and London-listed global depositary receipts of Orascom Construction Industries, the country’s biggest publicly traded builder, down 4.5 percent. The exchange won’t allow daily share moves to exceed 10 percent.
Analysts downgraded 10 of the 30 companies on the benchmark EGX 30 Index since the end of January and the government forecast economic growth will slow following the riots that led to the fall of former President Hosni Mubarak’s regime. Stocks may be bolstered by a rally in global markets that has continued amid unrest in the Middle East and Japan’s worst earthquake on record. Investors have also been encouraged by constitutional changes in Egypt to allow presidential elections by year-end.
“While there have been positive developments on the political side, the protests in Egypt did take a toll on the economy,” said Yong Wei Lee, who helps oversee about $1.2 billion as a senior fund manager at Emirates NBD Asset Management in Dubai. “It’s too early to consider bargain hunting. The Egyptian market will remain volatile for a while
The joint bid, which has been preliminarily accepted by the Zain Board, will secure 25% of Zain Saudi which is one of the three Saudi mobile service companies. His purchase of these Saudi assets will enable Kuwaiti Zain to now be purchased by UAE Etisalat (which holds the 2nd Saudi mobile license).
For those not used to emerging markets’ value investing, this is a deal straight from the “Waleed playbook” and is worth studying. We have seen him do this same deal many, many times. Mainly because it really works.
A bit of background. This was Waleed’s third attempt at acquiring a Saudi Arabian mobile business. He bid in the auctions for both the 2nd and 3rd Saudi mobile licenses in 2004 and 2007 respectively. And not only did he not win either auction, he was among lowest bids in both cases. For the third license, his bid was less than half of MTC’s (Zain’s) winning bid of $6.1b.
"We expect two to four IPOs in the region this year, mainly in Qatar and the UAE," Tom Emmet, RBS head of equity capital markets and mergers and acquisitions for the Middle East and Africa, said at a media roundtable in Dubai.
"My expectation is that if they come to the market this year, that's more likely in the second half. The IPO size is between $200 million and $400 million per issue," Emmet said, adding that some of these listings could take place in London.
First Gulf, controlled by Abu Dhabi’s ruling family, plans to sell bonds or sukuk this year, Chief Executive Officer Andre Sayegh said March 14. Masraf, Qatar’s second-largest Islamic bank, said March 15 it will seek shareholder approval to issue as much as $1 billion of Shariah-compliant debt.
The difference between the average yield for Gulf Cooperation Council sukuk and the London interbank offered rate has widened 65 basis points, or 0.65 percentage point, to 401 since Jan. 25 when the uprising erupted in Egypt, the HSBC/NASDAQ Dubai GCC US Dollar Sukuk Index shows.
Yemen continues to crumble on Tuesday, Reuters reports:
Yemeni President Ali Abdullah Saleh’s 32-year rule seems near collapse. His exit would spell uncertainty for his broken country and discomfiture for U.S. and Saudi friends, still backing their “ally” against al Qaeda.
The killing of more than 50 protesters in Sanaa on Sunday has turned a trickle of defections into a torrent as Yemeni diplomats, military officers, tribal leaders and politicians hasten to declare support for the anti-Saleh opposition.
This map of reserves, production and pipelines is also from IHS:
(For more on the tribal and other nuances amongst opposition groups, we recommend this dispatch from Sana’a in Foreign Affairs on February 25.)
New York's main contract, light sweet crude for delivery in May, gained 26 cents to $105.23 per barrel while Brent North Sea crude for May was up 51 cents to $116.21.
"The issues of Libya and Yemen have been driving prices of crude oil up, although Yemen is a small exporter and Libya has been more significant," said John Vautrain, vice president for Purvin and Gertz energy consultancy.