SCENARIOS-How might creditors react to Dubai World deal? | Reuters
Creditors to state-owned Dubai World [DBWLD.UL], which unveiled plans to repay $26 billion in debt last month, will give their response to the conglomerate's proposal within weeks, one of its main lenders said on Monday. [ID:nLDE63B12B]
The two-part proposal seeks to give bank creditors new debt covering the $14.2 billion they are owed by Dubai World, and repay in full the firm's property unit Nakheel's 2010 and 2011 bonds, if approved. [ID:nLDE62O010]
Below are the broad scenarios which could play out in the coming weeks as discussions progress. Banks are ultimately most likely to accept the Dubai World proposals but presenting interesting terms will be key to securing agreement.
Monday, 12 April 2010
Abu Dhabi Stocks Rise to 2-Week High on Confidence in Earnings
Abu Dhabi shares rose to the highest this month on investor bets first-quarter earnings in the United Arab Emirates will beat expectations after improving reports from Saudi Arabia. Dubai stocks advanced.
Emirates Telecommunications Co., the larger of two U.A.E. telephone companies, jumped the most in almost two months. Aldar Properties PJSC, Abu Dhabi’s biggest real-estate developer, gained for a second day. Dubai-based developer Emaar Properties PJSC rose to the highest since January after it was upgraded at JPMorgan Chase & Co. The ADX General Index rose 0.6 percent to 2,865.26, the highest since March 31. The DFM General Index climbed 0.5 percent to the highest since April 6.
“Investors are gearing up for first-quarter results,” said Haissam Arabi, chief executive officer of Gulfmena Alternative Investments in Dubai. Results coming out of Saudi Arabia “are better than expected and investors are excited that there will be a similar situation here.”
Dubai World Creditors to Respond to Proposal in Weeks, ADCB Says
Dubai World’s creditors will respond to a proposal to restructure $24.8 billion in debt within weeks, Abu Dhabi Commercial Bank PJSC’s Chief Executive Officer Ala’a Eraiqat said in Abu Dhabi today.
Abu Dhabi Commercial Bank is assessing the implications of Dubai World’s proposals on the lender’s provisions, he said.END
Islamic Bond Sales to Reach $30 Billion This Year, KFH Says
Islamic bond sales should climb 50 percent to $30 billion this year, driven by low interest rates and spending by governments on infrastructure programs aimed at supporting growth, KFH Research Ltd. said.
About $20 billion of Islamic bonds announced last year are expected to be issued in 2010 and “another $10 billion or more could potentially enter the pipeline,” KFH Research senior analyst Tursina Yaacob said in a phone interview from Kuala Lumpur today. A “big chunk” will come from Asia, helped by the revival of private-sector projects and economic expansion.
Sales of Islamic bonds, or sukuk, totaled $20.2 billion last year, compared with $14.1 billion in 2008, when sales slumped due to the global financial crisis, and $31 billion in 2007 after oil earnings boosted Arab wealth, according to data compiled by Bloomberg. Malaysia and Indonesia accounted for 87 percent of sales in the first three months of this year, according to KFH Research.
Why Dherar Al-Rabah was Appointed Chairman of the Commercial Bank of Kuwait? (Re-post)
“The new board of Commercial Bank of Kuwait (CBK) has chosen Dherar Al-Rabah as chairman, a bank official said on Thursday.”
The first question that came to everyone’s mind after hearing the news was: who is Dherar Al-Rabah?
Well, prior to his appointment as the Chairman of the new board of the CBK, Dherar Al-Rabah was the CEO and Managing Director of Stehwaz Holding, a subsidiary of The Investment Dar (TID). During his tenure at Stehwaz Holding, Dherar reported directly to his close friend, the renowned Adnan Al-Musallam. He was the perfect partner to Al-Musallam as he embodied the proverbial principle of the three wise monkeys to “see no evil, hear no evil, speak no evil.” During his tenure, Shizaru, the fourth monkey that is sometimes depicted with the three others and symbolizes the principle of “do no evil”, was never present. Stehwaz was a shell company to TID, a side pocket to its impaired and illiquid investments. In January 2010, a pool of 50 shareholders of Stehwaz finally retaliated and filed a legal complaint against the board of directors, auditors, and the parent company (TID).
One of the allegations was that back in 2007, TID sold its stake in Al-Madar Finance and Investments Company to Stehwaz after an auction failed to attract any other bidders. The deal was struck for KD 99.1 million, 450 fils a share, resulting in TID booking a profit of KD 48.7 million. Today, Al-Madar is trading at 57 fils. More stark was the fact that Stehwaz underwent an IPO, but was never listed. Currently is it trading on Souk Aljet at a price around 25 fils.
It is evident how Dherar failed the company and it’s shareholders, however, he was there whenever TID was dry on cash and wanted to offload a toxic asset. He was good at following directions and was an inside man in the TID scandal. He knew every detail about the corporation, and most importantly the Boubyan Bank stake and lawsuits.
The appointment of Dherar is clearly an alignment of interest, or so, at least for the chairman of Securities Group. In 2009, TID filed three lawsuits with the Kuwaiti judiciary against CBK to stop the bank from selling Boubyan shares and demanding that CBK returns the shares to Investment Dar. The complaint came after CBK said that TID and its related firms lost their right to buyback a 19.2% stake in Boubyan Bank originally valued at KD 94.1 million under a 2008 agreement. CBK had agreed to sell its 19.2% stake to the National Bank of Kuwait for about KD 121 million. On April 6th 2010, a Kuwaiti court ruled that it didn’t have the jurisdiction on a lawsuit filed by TID against CBK seeking to annul the sale of Boubyan Bank shares.
Upon the appointment of the new board to CBK, the old board was not cleared from wrongdoings at the request of one shareholder, Ali Al-Mousa (chairman of Securities Group). He asked for the leaving board’s pay to be examined. The shareholder insisted he was not making any accusations of wrongdoing, but exercising his right to demand information. This reminds me of one the most famous lines in The Godfather “Fredo, you’re my older brother, and I love you. But don’t ever take sides with anyone against the Family again. Ever.”
Iran to privatise oil and gas sector
Iran plans to privatise its oil refining, petrochemicals and oilfield services sectors but it may have problems finding buyers.
Under the threat of stiffer sanctions over its nuclear programme, the second-largest OPEC oil producer is seeking to accelerate the sale of state assets to help balance the government’s books and revitalise its troubled economy.
Now, even some parts of Iran’s previously sacrosanct petroleum industry could be up for sale in a reversal of the country’s previous policy of strict nationalisation of oil and gas assets.
VAT could rake in $1.8bn windfall
The replacement of customs duties with value-added taxes could generate a US$1.8 billion (Dh6.61bn) annual windfall for the government, one of the leading architects of sales taxation in the Gulf says.
A new taxation regime could be in place as early as 2012 if long-standing efforts among Gulf countries to introduce value-added taxes (VATs) bear fruit.
“A 5 per cent value-added tax in the UAE would double the revenues they get from customs duties,” said Ehtisham Ahmad, an adviser to the Prime Minister’s office who led the IMF’s efforts to assess tax options in the Gulf between 2006 and 2008. Customs duties account for about 0.7 per cent of GDP, a prior case study has shown.
Agility Says No Guarantee of Reaching U.S. Settlement
Agility, the Middle East’s largest logistics company, said there was no guarantee it would reach a settlement to a contract dispute with the U.S. military as fourth-quarter profit climbed 22 percent.
Net income rose to 40.9 million Kuwaiti dinars ($142 million), or 40.6 fils a share, the company said in an e-mailed statement today. Agility faces a “slower-than-expected recovery” from the global economic crisis, challenges from a U.S. troop drawdown in Iraq, and ongoing legal issues, Chairman Tarek Sultan said in the statement.
Agility, formerly known as Public Warehousing Co., was indicted in November for allegedly overcharging the U.S. government on a multibillion dollar contract to supply food for troops in Kuwait and Iraq. The company said in November it was negotiating with the U.S. Justice Department on a settlement of the charges.
Dubai’s $330 Billion of Deferred Building Imposes Investor Fees
Silvia Turrin paid two-thirds of the $520,000 purchase price of her Dubai apartment, only to learn that it won’t be finished until 2012, two years late. When she stopped payments to Emaar Properties PJSC, the developer hit her with late fees.
“We feel hopeless and we’re running out of options,” said Turrin, one of about 400 buyers in two nonexistent towers called 29 Boulevard. “It’s almost like we don’t have any rights.”
Developers in Dubai are demanding that buyers like Turrin keep paying for homes that in some cases haven’t even been started. Builders in the emirate have delayed or canceled projects worth about $331 billion, Dubai-based market researcher Proleads estimates. The best performing real estate market in the world collapsed in 2008 after credit dried up, sparking defaults and forcing writedowns of land and property values.
Kuwaiti firm unsure of settlement in US fraud case
A Kuwaiti logistics firm that is a major supplier of the U.S. military cast doubt Sunday on whether talks to reach a settlement with American prosecutors over fraud allegations will bear fruit.
Public Warehousing Co. said it is continuing negotiations with the U.S. government in an effort to resolve a dispute over multibillion-dollar contracts to feed American troops.
"However, there is no guarantee that the parties can reach a mutually agreeable settlement," it added in an update on the talks included in its annual financial report.
Qatar aluminium foray ‘strategic’
Qatalum has tremendous prospects in emerging markets and is strategically positioned to supply consumers in Asia and Europe alike, chief executive officer Jan Arve Haughan has said.
Qatalum’s value-added aluminium products can be used in an unlimited variety of manufacturing applications and products in building and construction, transportation, general engineering and leisure industries and in household durables.
“When we look outside, we see a lot of construction activities. Aluminium is a key component in construction and other main sectors,” Haughan said.
The $5.7bn world-scale aluminium smelter is being inaugurated at Mesaieed today.
Dubai forms team to develop financial plans
Dubai's government has set up a team to draw up the emirate's financial plans for the 2011-2014 period, improve spending efficiency and develop new revenue structures, the government said in a statement on Sunday.
Dubai unveiled a $9.5 billion rescue plan for debt-laden government conglomerate Dubai World last month. The plan requires the Gulf Arab emirate raise $3.8 billion from "internal government resources".
The team, which will operate under the supervision of the Dubai Department of Finance, is to provide recommendations on developing a new structure for revenues, discuss and comment on quarterly reports and invite support from third-parties when required to achieve financial goals, the statement said.
Total chief still keen on UAE despite setbacks
Total, the French oil company, is looking to invest in the United Arab Emirates’ nuclear industry despite having been part of a consortium that lost the $20.4bn contract to build the country’s reactors.
The loss to a Korean consortium, led by Korea Electric Power Corp and initially seen as the underdog, was widely acknowledged as a major upset. It has prompted the leader of the French group, Areva, to rethink its strategy, including considering offering older, cheaper reactors.
Christophe de Margerie, Total’s chief executive, said in an interview that he was fully aware of the controversy Total’s potential investment could cause in France. “If Abu Dhabi wants a partner, we can be that partner. But if it were to be considered anti-Areva, we’d have to think about it,” he told the Financial Times.