Bloodshed. The KSE weighted index closed down -4.74% yesterday and is down another 2.2% as of Wednesday 10:15 AM. Agility was accused yesterday in an $8.5Bn fraud and conspiracy case by the US government. The indictment will prevent Agility from bidding for contracts during the legal proceedings but the suspension doesn’t preclude it from completing current contracts. This is a severe blow for the company as it derives 75% of its EBIDTA from US government contracts (Cheuvreux estimates). Moreover, this is a calamity for an already weak Kuwait SE sickened by the potential collapse of the Zain sale deal and constant political unrest. Needless to say, Agility closed limit-down yesterday and is currently also trading limit-down. It also dragged the top 3 Kuwait Stock Exchange index heavyweights Zain, NBK, and KFH limit-down with it.
As acting U.S. Attorney for the Northern District of Georgia Mr. Shelnutt elaborates, “The indictment alleges PWC submitted false information and manipulated prices to overcharge for food. This indictment is only the first step. Our investigation of entities and persons who have defrauded the United States and our military is ongoing.” According to reports, an initial appearance and arraignment for the company is set for Nov. 20 in Atlanta. Prosecutors said they were unsure who would be representing the company in that proceeding. It will be peculiar to see what Agility has to say at the initial appearance.
The Agility crisis is significant for several reasons:..........
ITT and KRH are next
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