Global Investment House (GLOBAL) gets sharply downgraded by Fitch - in August, the Fitch ratings for Global were BBB for default and Stable Outlook. Global is in a spot of bother over a loan that has matured and is due for repayment, or refinancing, which Global appears to be having difficulty in arranging. Global shares were untraded on the DFM today, and yesterday, and the day before, and ... so on back to 30 November 2008 when they fell 10% to AED 8.91.
Press Release 15 December 2008:
Fitch downgrades Global Investment House's IDR to 'C'; rating watch negative
Fitch Ratings-London: Fitch Ratings has downgraded Kuwait-based Global Investment House's (Global) Long-term Issuer Default Rating (IDR) to 'C' from 'BBB', Short-term IDR to 'C' from 'F3', and Individual rating to 'E' from 'C'. Global's Support rating is affirmed at '5' and the Support Rating Floor is affirmed at 'No Floor'.
The Long- and Short-term IDRs and Individual rating are placed on Rating Watch Negative (RWN). In addition, Fitch has downgraded Global's Long-term local currency IDR to 'C' from 'BBB' and the expected rating on its KD50m fixed/floating Long-term local currency bond to 'CC' from 'BBB' and assigned a Recovery Rating of 'RR4'. The final rating on the notes is contingent on the receipt of final documentation conforming materially to information already received.
The ratings assigned to Global's $2bn EMTN programme have also been downgraded to 'CC' from 'BBB' and 'C' from 'F3', which reflects Fitch's current assessment for recoveries for any issuance under the programme of 'RR4'.
The rating action follows Global's inability to meet an obligation due on 15 December 2008 due to cash flow problems. Fitch understands that failure to meet this obligation within 72 hours would result in the company defaulting on this obligation.
So what will Global Investment House be doing this time next week?
The National 16 December 2008:
Global Investment House near default, says Fitch
By Travis Pantin
One of the largest investment companies in Kuwait has missed one of its loan payments and may face default if it is unable to service the loan by today, according to a leading ratings agency. Fitch Ratings lowered its rating on Global Investment House (GIH) (GLOBAL) to one notch above default after the company on Monday informed the agency that it had missed a payment due on Dec 15. Neither Fitch nor GIH would specify the size of the payment or the loan.
Maha al Ghunaim, the managing director and chairwoman at GIH, said she was “confident this is a temporary situation and Fitch will be fully satisfied and will resolve their reviews shortly”.
Regional banks have faced difficulties securing funding as the international loans they had previously depended upon have all but dried up.
“Things have deteriorated very quickly,” said Robert Thursfield, a sovereign analyst at Fitch. “It’s obviously an indication that there are serious stresses in the market, and unless you’ve got a significant deposit base, you’re more likely going to face big problems.”
While GIH would be the first major Gulf financial institution dragged into default by the financial crisis, Fitch’s announcement came amid mounting evidence that the credit environment is deteriorating.
Moody’s Investors Service, another ratings agency, said on Monday that three UAE banks may face lower credit ratings. Moody’s lowered its outlook on ratings for three local banks, Abu Dhabi Commercial Bank (ADCB), First Gulf Bank (FGB) and Dubai Bank.
GIH announced today it had taken steps to renegotiate the terms of its existing loan facilities with the help of the Commercial Bank of Kuwait, and had called for a meeting with the lenders next week.
The original terms of the loan gave GIH an extra 72-hour grace period following the due date of Dec 15, Fitch reported. The agency’s decision to downgrade the bank was based on the expectation that it had only until Thursday to come up with the money. In a statement, Fitch said the rating action followed Global’s inability to meet an obligation due on Dec 15 due to cash flow problems. “Global is in negotiations with local financial institutions to refinance the above facility. Fitch understands that other obligations will also fall due in December,” said the agency.
GIH had been hit especially hard by the credit crunch, because its funding strategy relied heavily on international lending, which had become scarce in recent months, analysts said. GIH said it had US$3 billion (Dh11bn) in debt and $10bn in assets under management. The company’s stock fell 6.58 per cent today to 355 Kuwaiti dinars (Dh4,776), down 60.5 per cent this year.
“A GCC bank defaulting would be a first for this crisis. Given the ample funding the government has to interfere, it would really surprise me if they don’t come up with the money,” said Eckart Woertz, an economist at the Gulf Research Center.
The Central Bank of Kuwait earlier this month asked local lenders to contribute $1bn into a fund dedicated to helping GIH make its payments, according to the Kuwait daily, Al Qabas.
There was an unsubstantiated rumour that Royalgroup of Abu Dhabi was intending to make a bid for GIH last month..Nothing happened and I assumed that it was just bollox but now this.
Dubai International Capital is a 12% stake holder in Global Investment House, so technically one of DIC's investments are going down-under or in other words one of Dubai Holdings company is defaulting.
Another credit rating downgrade for Global Investment House, from S&P today. Global plans to have discussions with creditors on 21 December 2008. So if that doesn't go well and Global end up defaulting, is that them gone bust? Or will we see a flurry of Global classified ads on dubizzle.com or in the Gulf News over the weekend?
Press Release 17 December 2008:
Global Investment House Downgraded To 'SD/SD' On Syndicated Loan Nonpayment
PARIS - Standard & Poor's Ratings Services said today that it lowered its long- and short-term counterparty credit ratings on Kuwait-based Global Investment House KSCC (GIH) (GLOBAL) to 'SD/SD' (selective default, meaning payments may not be made on some financial obligations) from 'BBB/A-3'.
"The rating action follows GIH's nonpayment of a $200 million syndicated loan due on Dec. 15, 2008," said Standard & Poor's credit analyst John Gibling.
GIH has been unable to fulfill its obligations toward its creditors and has extended the maturity of the loan by one week to Dec. 22, 2008. This is classified as a distressed exchange offer and is therefore considered as a selective default under Standard & Poor's methodology.
On Dec. 14, 2008, GIH announced that it is entering into negotiations with its creditors to refinance its short-term debt obligations and convert them into secured medium-term facilities using the bank's assets as collateral. The discussions with creditors are planned to take place on Dec. 21, 2008.
Standard & Poor's will continue to follow closely the developments at GIH and will adjust its ratings depending on the outcome of the negotiations between the bank and its creditors and its continued ability to meet its debt obligations in a timely manner.
Global Investment House initiates discussions with lending banks who agree to form a steering committee to take the process forward
Kuwait - Global Investment House KSC (GLOBAL) announces that HSBC Bank has been appointed as international financial adviser to renegotiate the existing credit facilities' terms with lending banks in addition to the previous appointment of CBK Capital as local financial adviser.
The debt restructuring process was formally commenced today following a well attended meeting in Kuwait with the Company’s bank lenders. The banks have agreed to form a steering committee to continue discussions with the Company and its advisers. The management of Global is committed to resolving the process as quickly as possible and is confident that this will be achieved to the benefit of all stakeholders.
Maha Al-Ghunaim, Chairperson and Managing Director added, “We are very focussed on the long-term interests of our lenders, clients, employees and shareholders and expect to reach an agreement with our financing providers soon.”
Omar El-Quqa, Executive Vice President, commented, “We are pleased with the outcome of today’s meeting and look forward to constructive discussions with our lenders. We are encouraged by the support that we have already received from some of our lending banks.”
Global doesn't want to sell their investments otherwise they take a hit on their balance sheet. Well, I can understand that sentiment. I don't want to sell my shares either, for the same reason. But given the prices I paid for some of them, I don't expect my personal income statement to be showing a profit anytime soon ...
Associated Press 21 December 2008:
Kuwait's Global says creditor response 'very good'
CAIRO, Egypt: The managing director of Global Investment House, Kuwait's largest investment bank, said Sunday its lenders were responding positively to debt restructuring efforts begun after two international agencies downgraded its credit rating on default worries.
Samir El Alaily, Global's vice chairman, said the investment firm was meeting with about 20 banks in an effort to restructure short-term loans into medium-term positions that would "enable us to weather the storm."
The overall debt level in question was about 800 million Kuwaiti dinars ($2.86 billion) — far more than the single maturing loan of $200 million that resulted in the downgrades last week by Fitch Ratings and Standard & Poor's.
Global's downgrades were but one of several such moves in the oil-rich Gulf Arab nations as concerns mounted that the region's companies were overextended after years of spending and development fueled by hefty oil revenues in the region.
Fitch had downgraded Global's long-term rating from BBB to C, and its individual rating from C to E after the firm missed the Dec. 15 repayment of the loan. S&P quickly followed suit, lowering the company's rating to SD/SD from BBB-A 3. The downgrade to "selective default" meant that some payments may not be made on some financial obligations, the rating agency said.
Global scrambled to cover its position, appointing the Commercial Bank of Kuwait as an adviser while the Central Bank of Kuwait was working to secure a $1 billion loan for the investment bank, which manages assets totaling $10 billion.
"We are sitting with the banks today," El Alaily told The Associated Press on the sidelines of an investment conference in Egypt. "We think we will reach the settlement agreement with the banks very soon."
"It was a very good response," he said. "Most of the banks have come, and most of them are willing to speak to us."
El Alaily said the debt issue emerged from the bank being "very active in treasury."
"About 60 percent of our profits are coming from proprietary investments," he said. Those investments are "either trading on the secondary markets with shares, or we are leveraging ourselves when we invest in companies."
With the sharp downturn in Kuwait's stock exchange, as well as other bourses regionally — a decline fueled by the global economic crisis — El Alaily said Global did not want to sell now fearing "a big loss on our balance sheet."
"We want better paying terms, and we want to show a profit on our balance sheet," he said.
Uh-oh. This doesn't sound good for Global Investment House (GIH) (GLOBAL). According to "sources", refinancing talks have stopped. Will Global have anything to say before the markets open in the morning?
Reuters 23 December 2008:
Global halts local bank talks on $1 bln loan- sources
by Rania El Gamal
KUWAIT - Global Investment House (GLOBAL), Kuwait's biggest investment bank, is no longer in talks with local banks to secure $1 billion in loans to refinance its foreign debt, sources said on Tuesday. Talks between the two sides stopped after some banks asked for state guarantees before making a financing commitment, a source at a local bank told Reuters.
"The deal did not work. Banks did not get a response from Global and no one knows what's happening," said the banking source.
Instead, the company turned to HSBC to help it renegotiate its debt with foreign lenders. Global, which had retained Commercial Bank of Kuwait as a debt advisor to local lenders last week, added HSBC to its roster on Sunday.
"Global went along with the alternative of appointing HSBC to renegotiate with the lenders. Talks with the local banks were taking time," said another source familiar with the matter.
Global announced this month it was in talks with local banks to secure loans worth $1 billion to replace short- and medium-term foreign loans. Officials at Global and CBK could not be reached for comment.
Kuwait's central bank did not immediately respond to a Reuters email asking whether it will provide any guarantees. The central bank rescued Gulf Bank, the country's fifth-largest bank, in October after it suffered steep derivatives losses.
Shares of Global dropped more than 5 percent on Tuesday despite an uptrend on the Kuwaiti bourse, as concerns on the firm's ability to pay back its debt weigh. Global, which has $3 billion in debt, was downgraded by two rating agencies last week for allegedly not meeting debt obligations. The stock has fallen almost 33 percent since the downgrading actions by Fitch Ratings and Standard & Poor's.
"They are trying to negotiate with banks regarding postponing an obligation of $200 million and this has put severe pressure on the share price," said Rami Sidani, head of MENA Investments at Schroders Investment Management in Dubai.
They need a deal with local (gulf) money men instead of re-negotiations...GIH is well run and an Iconic company, it´s likely that many are willing to invest in the company.
Is Global Investment House (GLOBAL) bust now? Global shares in Dubai were 10% limit down at AED 5.27 by close. Shares fell within minutes of opening and stayed there all day. The question that's got me scratching my head is who was buying the shares offered? There were AED 4.4m worth sold today - substantial volumes for Global, which rarely trades at all, let alone that much in Dubai. On Monday and Tuesday this week, they fell 10% limit down also.
Yet again, these double (or triple) listings remind us of the poor state of UAE investor relations. The London Stock Exchange disclosure is nowhere to be seen on the DFM website .
Reuters 08 January 2009:
Kuwait's Global Investment defaults on most debt
by Ulf Laessing and Paul Hoskins
London/Kuwait: Global Investment House (GLOBAL) (GIH), Kuwait's biggest investment bank, said it had defaulted on most of its debt as a crisis of investment firms hit by a global credit crunch widened in the Gulf Arab state. "The company is in default on the majority of its financial indebtedness," Global said in a statement to the London Stock Exchange where it has a listing for Global Depository Receipts (GDRs).
All Kuwaiti listed and unlisted investments firms had a total debt of around 8 billion dinars ($28.27 billion) in December, according to the local Al-Joman Center for Economic Consultancy.
The bank said it would continue to service all its interest and coupon payments "on a timely basis".
Global, which is heavily invested through mutual funds in many international markets, said last month it needed loans worth $1 billion to replace foreign debt.
A banking source told Reuters that Global, which operates officially as investment firm, had been unable to get new loans from local banks.
"There are no talks with local banks anymore," a source at a major bank told Reuters.
Kuwait's central bank has warned that several investment firms, which make up more than half of the country's listed firms and offer typical investment banking services, might get hit by the global credit crunch.
Global shares fell 7 percent by 0847 GMT in Kuwait.
Global Investment House (GLOB) disclosure on the LSE website. Timestamp is 07:13, presumably GMT, which would be about 11:13 UAE time (+4 hours?). Global share price hit the floor as soon as the market opened at 10am in the UAE, about an hour before the news appeared on the LSE website. The question still remains, why wasn't this on the DFM website (and still isn't)?
Disclosure 08 January 2009:
Company Global Investment House KSC (c)
TIDM GLOB
Headline Update on debt restructuring process
Released 07:13 08-Jan-09
Number 3125L07
RNS Number : 3125L
Global Investment House KSC (c)
08 January 2009
Update on debt restructuring process
8 January 2009: Further to our previous announcement, released on December 29th 2008, Global Investment House KSC ("Global" or the "Company") confirms that as a consequence of a capital repayment default in the second half of December on one of its syndicated facilities and due to the cross default provision, the Company is in default on the majority of its financial indebtedness.
Global continues to service all its interest and coupon payments on a timely basis. As previously disclosed, Global has appointed HSBC Bank as international financial advisor and CBK Capital as its local advisor. In order to work towards a mutually acceptable solution with financial creditors, a Steering Committee has been formed by the Company's financiers and it is in close and constructive dialogue with the Company and the Company's advisors.
The Management of Global is committed to resolving the situation as soon as is practicable.
I feel that GLOBAL is caught between a rock and a hard place right now, if they sell assets they will post losses, if they don´t they will default.
As for why no local investors/banks are willing to give them a bridging loan I have been told (might be bollox) that Global relied on not being associated with any of the established powerblocks within the gulf, meaning that could do business with anyone.
The downside seems to be that they can´t rely on anyone to help them out either.
Kuwait's Global Investment House (GLOBAL) is in talks with a local bank to have it release KD45 million ($152.5 million) in deposits frozen by the bank over a loan dispute, a company source said on Monday.
The Kuwaiti investment bank had managed to negotiate with the unidentified bank to release KD15 million of the deposits, said a Global spokesman, who asked not to be named.
The spokesman said the deposit held funds of Global clients related to a Saudi investment. But the bank froze the deposits due to a dispute of a loan, he added, declining to give further details.
"We were able to get 15 million back and are working to get the rest," the spokesman said.
Global said last month it had defaulted on most of its debts as investment firms in Kuwait suffer from the global financial crisis.
At the end of 2008, Global had total liabilities of $3.1 billion after defaulting on a $200-million loan in mid-December, executive vice-president Bader al-Sumait told Al Arabiya television last month.
In December, Global said it had appointed HSBC and Kuwait's CBK Capital to hold talks with creditors to reschedule debt.
Kuwait last month unveiled a 1.5 billion dinar economic support package that includes state guarantees on fresh loans extended by banks to help struggling investment firms. The plan still requires parliamentary approval.
Global Investment sees long-term financing solution
by Austin Lobo in Bangalore
Makes progress towards financial restructure
To service coupons, interest payments on time
Shares fall 9 pct
Kuwait's Global Investment House (GLOBAL) said on Tuesday it was confident of reaching a "sustainable, long-term financing solution" in coming months after making "significant progress" with its bankers towards restructuring and rescheduling the company's debt.
Global, along with its financial adviser, HSBC, presented restructuring plans to its banking group, the investment bank said.
Global also said it would continue to service its coupon and interest payments on time. Last month, Global said it had defaulted on most of its debts as investment firms in Kuwait suffered from the global financial crisis.
Global, which is heavily invested through mutual funds in many international markets, had said in December it needed loans worth $1 billion to replace foreign debt.
At the end of 2008, Global had liabilities of $3.1 billion after defaulting on a $200-million loan in mid-December, executive vice-president Bader al-Sumait had told Al Arabiya television last month.
Global Investments shares were down 9.3 percent at 1.07 pence at 1240 GMT on the London Stock Exchange.
(GLOBAL) Global Investment House: Press release regarding the developments on the company’s debt re-structuring
A solution? Whatever it was, it wasn't supplied but I presume it was meant to be the same as this press release, received on 03 March 2009. So, are Global out of the woods yet?
Press Release 03 March 2009:
In a joint message released by Global and the Banks’ Steering Committee
Positive developments in the restructuring of Global’s indebtedness
Global Investment House (GLOBAL) is today pleased to be able to update the investor community on the continuing progress in respect to the restructuring of Global's indebtedness. In light of recent positive developments, this announcement is being issued jointly by Global and the Steering Committee which has been appointed by the majority of the wider banking group to represent their interests.
Over the last 9 weeks since the appointment of HSBC as financial adviser to Global, Global and its banking group have been in close and constructive dialogue and have made significant progress towards restructuring and rescheduling Global's indebtedness culminating in meetings with the banking group in Dubai and London on the 23rd and 24th February 2009. Global, together with its advisors, were able to present comprehensive restructuring plans to its banking group backed up with financial forecasts, a detailed business model and an independent valuation. This is an important milestone for Global and demonstrates the desire by the management team to resolve this issue as quickly and efficiently as possible.
It is of note that throughout the restructuring process, Global has at all times continued to service all coupon and interest payments on a timely basis, which it intends to continue to do.
Although much work remains to complete the restructuring, Global and the Steering Committee remain confident that by working cooperatively, a sustainable, long term financing solution for the Group, which takes into account the requirements of all stakeholders, is likely to be achieved in the coming months. A further announcement will be made in due course.
Maha K. Al-Ghunaim, Chairperson and Managing Director of Global commented: "I am encouraged by the swift progress that has been made since December and by the positive response of the banks to our outline proposals."
The Chair of the Steering Committee, added: "The Steering Committee is encouraged by the progress that Global has made and by the proposals that have been put forward. The Steering Committee will, taking into consideration the interests of the wider banking group, continue to constructively work with the company to ensure a swift resolution to this matter."
You cannot post new topics in this forum You cannot reply to topics in this forum You cannot edit your posts in this forum You cannot delete your posts in this forum You cannot vote in polls in this forum
Disclaimer: Investing in stocks is risky, you can lose some or all of your money and/or other assets. Anything you read on this site should be regarded as the opinion of the author only and is not to be taken as advice to buy, sell, or hold stocks and/or any other investments. Seek professional advice and do your due diligence before making investment decisions. In particular, do not assume anything you read on this site is correct or accurate. You should accept that only you can be responsible for any investing decisions you make.
2008 FY
FAQ
Search
Print-friendly
Profile
Private messages
Register
Log in
...
.
