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16-Aug-12 CBI shareholders have already given a nod to changes in the 19:07 QNB could look to increase stake in CBI - shareholding limit for foreign investors, allowing them to own sources up to 49% of the total shares of the , according to a 5 August stock exchange filing. The lender said that the new Story Victoria Robson (mergermarket subscriber), refer to shareholding limit will help CBI to grow and increase its market disclaimer on restrictions of use at the bottom of the page. share in the UAE.

Qatar National Bank (QNB), the largest listed lender in the However, the second source said the mere fact that CBI has , could increase its stake in the UAE’s gone through the process of seeking a vote on changing the International (CBI), a person and two other sources familiar foreign ownership percentage indicates that a QNB stake with the situation said. increase is on the cards. QNB being the major shareholder is very alive to the possibility of further investments in CBI, he “CBI already has one significant foreign shareholder and it added. [QNB] may have the intention to increase its stake in the bank,” one source said. “Judging by virtue of CBI actually going for that increment [in the foreign ownership limit], clearly there must be some QNB is the only foreign shareholder in CBI and with a current discussions [on stake increase],” the source noted. 23.8% stake, it is also the largest investor in the Abu-Dhabi lender. QNB has a 17% direct stake in CBI and it controls the The person agreed saying that the ball is now in QNB’s court rest through indirect shareholding arrangements, the source as CBI has already completed the procedural steps. pointed out. Although the UAE’s banking and financial sector is crowded Mariam Khlaifan Abdullah Al Noaimi and Mohammed Omar Ali at the moment, it makes sense for QNB to further invest in Bin Haidar, two private investors, own 22.12% and 8.94% in CBI to strengthen its position in the UAE, the second largest CBI, respectively. The Private Investment Company controls banking and market in the GCC after Saudi 19.77%, while Ras Al Khaimah Company for White Cement Arabia, the person pointed out. and Construction Materials owns 8.18% stake in the bank. Abu Dhabi Commercial Bank has a 7.27% stake in CBI, while The person said that a strong 1H2012 financial performance only 4.88% of its shares are traded on Abu Dhabi Securities by CBI and the lender’s move to make changes in its foreign exchange. ownership structure has recently stirred interest from investors

Get started now email [email protected] www.dealreporter.com other than QNB. “It has brought a sudden investment interest “The official decision regarding the new money has yet to into CBI,” the person noted. come from the credit committees of most . However, informally almost all banks have indicated they will not support He however would not say whether the interested investors it,” the source said. other than QNB were based in GCC or outside the region. The official response from most banks is expected after the Eid CBI reported a net profit of AED 141.3m, for 1H2012, up 154% holiday (19 and 20 August), the source said. compared to corresponding period in 2011. CBI’s 2Q2012 net profit of AED 66.1m was a 108% improvement on AED 31.8m, The first source went on to say that the likely failure reported for the same period in 2011, according to company of Fal to raise new money from its lenders has led financials. PricewaterhouseCoopers – which is advising creditors – to suggest the need for a contingency plan to the company’s In line with its international expansion plans, QNB has recently advisor, KPMG, the first source said. This plan would amount been acquiring new stakes and firmed up its holdings in some to a wind-down of the company, he said. of its units. The bank got approval from the Iraqi regulator in April to increase its stake in Mansour Bank from 23% to 51%. “The suspension of rights [in the restructure plan] is agreeable It also acquired a 49% stake in Libya’s Bank of Commerce & to most banks, but that is now subject to Fal getting finance Development, the bank said in a statement in April. QNB Group from a third party. The banks don’t believe that will happen, is currently present in more than 24 countries around the world and based on that a wind-down is now the most likely option,” through branches, subsidiaries and associates. he explained.

QNB has a market capitalisation of QAR 94.1bn (USD 25.8bn). Meanwhile, a separate source countered that a contingency It is 50% owned by Qatar’s sovereign wealth fund, Qatar plan was not something that had been discussed by the Investment Authority. company recently. He also believed it would have been impossible for banks to discuss the matter yet as they only CBI has a market capitalisation of AED 1.5bn (USD 402m). Its took the restructuring plan to their internal credit committees shares have risen 23.5% since the beginning of this year. at the end of last month. He added that Fal was in the process of hiring a restructuring officer to handle the negotiations, and by Sarmad Khan expected to have someone on board next month. To be used for the internal business of the assigned users only. Sharing, distributing or forwarding the entirety or any part of this article in any form to anyone that does not have access under your agreement is strictly prohibited and doing so violates your contract and is KPMG has said Fal’s owners, the Al Sari family, are against a considered a breach of copyright. Any unauthorised recipient or distributer of this article is wind-down of the company, the first source said. The steering liable to dealReporter for unauthorised use and copyright breach. committee is now waiting for a meeting with the company, Source dealReporter expected next week, to discuss the situation, he said.

16-Aug-12 “At the meeting the company will be told there is no new 22:12 Fal Oil restructuring jeopardized by money, and winding down is the only option on the table,” he missing oil; sparks wind-down talk claimed. Story Victoria Robson (mergermarket subscriber), refer to In a letter to the steering committee earlier this month, Fal disclaimer on restrictions of use at the bottom of the page. said that some oil financed by Standard Chartered had been transferred off one of its ships without the knowledge of the Fal Oil Company’s attempts to restructure debts of around company, according to the first source and second creditor. AED 4bn (USD 1.1bn) and raise USD 650m in new working Fal blames a senior employee who has subsequently left the capital have been dealt a blow by the loss of oil acting as company for the movement of the oil, the source and the for Standard Chartered, according to a source second and third creditors said. familiar with the situation and three creditors. According to the letter, the majority of the oil is now onshore The development prompted Standard Chartered, the chair of in the UAE under court custody and Fal is seeking to recover Fal’s creditor steering committee, to tell the committee it is it, the source and second creditor said. As yet, banks have no rejecting the company’s request for new working capital, the proof the oil is in the UAE or protected by the court, the source source and one creditor said. said.

The source and the second and third creditors said they “Banks were not positive from day one but they worked for believed most other lenders are also rejecting the request. The a deal. They wanted to see support from the shareholders, second and third creditors said their own banks will not provide but none came. Now they have made provisions and new money. acknowledged they will lose. The wind-down is their only option to recover anything,” he said.

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Get started now email [email protected] Any recovery is expected to be very small, he added, unless a then monitor performance for a couple of years and if the dispute over receivables between Fal and the Water performance is good the arrangement should stay, otherwise & Electricity Authority (SEWA) is settled in Fal’s favour they can make decisions at a later stage over what to do with and lenders can claim payment from SEWA. But that case is the management,” the person said. expected to be lengthy, he said. The reconstituted board could be discussed at an extraordinary Any move to liquidate the company without shareholder general meeting (EGM) scheduled to take place on 2 support could see Abu Dhabi Commercial Bank (ADCB), September, the person speculated. which has been suing Fal for recovery of debts, rejoin other creditors for a single court process, the third creditor GIH announced the EGM and an ordinary general meeting suggested. taking place the same day on the stock exchange yesterday afternoon (12 August). The agenda did not mention a board Negotiations over Fal’s debt have been fully merged with those election, but does reveal some details of the restructuring plan of Investment Group Private Limited (IGPL) the source said, agreed by the company and its lenders. in an effort to solve both companies’ situations through a single arrangement. IGPL, Fal’s parent, is restructuring around Under the plan, the company will issue new share capital to USD 300m, as reported. a special purpose vehicle (SPV) established for the benefit of the creditors, and will transfer some of its assets to a second The Fal steering committee comprises Standard Chartered, SPV also established for the benefit of its creditors. The capital Emirates NBD, Commercial Bank of Dubai, First Gulf Bank, issued would give the SPV approximately 70% ownership in Barclays and National Bank of Abu Dhabi (NBAD). The IGPL GIH. steering committee includes Barclays, NBAD, and Mashreqbank. According to the creditor, the equity and assets allocated to the SPVs will be sold over a six and eight year period respectively, A spokesperson for Fal Oil and IGPL declined to comment. and creditors will be repaid in cash pari passu. A spokesperson for Standard Chartered said the bank cannot comment about specific details of its exposure. “We continue There is no set schedule for the liquidation of the assets or to work with the company and other lenders to find the best the equity, he said; sales will occur based on market values solution,” he said. determined by restructuring agent KPMG. “If at any given time the value of a certain asset is below what is expected then A spokesperson for ADCB did not respond to a request for they will defer the liquidation of that asset,” he explained. comment. However if at the end of the six and eight year periods the by Samuel Potter, with additional reporting by John Everington equity and assets have not been sold, they will be sold regardless of valuation, he said. If the sales do not cover the To be used for the internal business of the assigned users only. Sharing, distributing or forwarding the entirety or any part of this article in any form to anyone that does not have debt, GIH may still have debt on its balance sheet, the person access under your agreement is strictly prohibited and doing so violates your contract and is considered a breach of copyright. Any unauthorised recipient or distributer of this article is and the creditor said. liable to dealReporter for unauthorised use and copyright breach. All lenders sought and received internal credit approval for the Source dealReporter restructuring plan before a 31 July deadline, the creditor said. 13-Aug-12 Lenders now expect to receive final documentation for the deal by 31 August, he added. Subject to the documentation the deal 12:39 Global Investment House creditors may could be completed in September, he speculated. seek board control Story Victoria Robson (mergermarket subscriber), refer to A spokesperson for GIH declined to comment. disclaimer on restrictions of use at the bottom of the page. The total debt under restructure is around KWD 480m (USD Creditors to Global Investment House (GIH) could seek 1.7bn), the creditor said. According to the EGM agenda, the control of the company’s board of directors, according to a company plans to issue around 1.2bn new shares each valued person familiar with the situation and a creditor. Lenders could at par, or KWD 0.1. This would raise the company’s total seek to elect representatives to six of the board’s nine seats, capital to KWD 174.6m and would settle KWD 122m of the they said. company’s debt. Existing shareholders would waive their right to subscribe to the capital increase. “They would be diluted. However managerial control of the company is likely to remain They stand to lose a lot,” the person said. unchanged for now, the person and the creditor said. The assets to be transferred to the second SPV have yet to be “GIH is trying to negotiate so that the bankers control the confirmed, but the statement said the fair value of these assets board but the management stays the same. The board can and investments “will not exceed the amount of reduction in

www.dealreporter.com the company’s liability as a result of the transfer”. negotiations ahead of the maturity of a USD 1bn sukuk, according to two sources close to the situation. Moelis would The assets transferred will include certain of GIH’s managed join the law firm Linklaters on the creditor side; Latham & investment funds, according to the person. He said GIH will Watkins, Blackstone Group and Deutsche Bank are advising continue to manage and receive management fees from the the company, as reported. funds, although ownership will transfer to the SPV. Discussions between the company, holders of the sukuk, Creditors are in favour of the plan, the creditor believed. He and their respective advisers are more or less on hold until described it as a “decent deal”. Moelis starts work, one source said. “Nothing much has been happening, but things may heat up as we move towards The EGM agenda says the company will also seek approval to October,” he said. write-off KWD 31m accumulated losses against the remaining share premium, and approval to write-off KWD 77.1m of The USD denominated convertible sukuk, of which accumulated losses from the company’s paid up capital. approximately USD 920m remains outstanding, matures on 31 October, as reported. In July the Capital Market Authority in Kuwait said it would delist GIH unless the company writes-off accumulated losses A spokesperson for Moelis declined to comment. by 30 September while maintaining capital of not less than KWD 15m, as reported. A spokesperson for declined to comment on the companies advising sukuk holders, but said Dana’s Q2 results At the EGM the company will also seek authorisation from press release, which will be issued on Thursday or Sunday, shareholders to delist the company from any stock exchange, will include a “good portion of information covering financial aside from the Kuwait Stock Exchange (KSE), as the board and legal consultants and some comment on the company’s deems appropriate, according to the agenda. progress [dealing with the sukuk]”.

GIH is listed on the KSE, the Bahrain Stock Exchange, the Although profitable, Dana has a high level of receivables and Dubai Financial Market, and the London Stock Exchange. not enough cash on its balance sheet to repay lenders, as reported. In a May press release the company said although This is the second restructure for GIH; in December 2009, certain economic realities have affected Dana’s ability to the company signed its first restructuring agreement with 53 raise new funding, the company is committed to finding creditors to cover USD 1.7bn in debt. a consensual solution to the sukuk that is equitable to all In the latest restructuring negotiation creditors have been stakeholders. represented by a steering committee comprising Abu Dhabi If the sukuk is restructured then it will be the first time for an Commercial Bank (ADCB), Kuwait Finance House (KFH), Gulf Islamic bond in the UAE. Bank, Commercial International Bank, Standard Bank, Standard Chartered, the creditor said. KFH represents Islamic lenders, Dana issued the Modarabah USD sukuk in 2007, and the issue while Gulf Bank represents Kuwaiti lenders, he added. pays a fixed profit rate of 7.5%. On 31 July, SJS Markets priced the paper at a cash price of 71.332-75.499. ADCB is chair of the steering committee, according to a second creditor. In October 2011, president Badr Jafar told this news service Crescent would consider increasing its by Samuel Potter and Sarmed Khan 20.12% stake in Dana Gas. But according to reports in May, To be used for the internal business of the assigned users only. Sharing, distributing or Crescent CEO Majid Jafar has ruled out a capital injection to forwarding the entirety or any part of this article in any form to anyone that does not have access under your agreement is strictly prohibited and doing so violates your contract and is support repayment of the sukuk. considered a breach of copyright. Any unauthorised recipient or distributer of this article is liable to dealReporter for unauthorised use and copyright breach. Dana’s main activities include the exploration, production, Source dealReporter distribution, marketing and sale of natural gas and petroleum related products. In 2011 the company produced approximately 07-Aug-12 65,000 barrels of oil equivalent a day of oil, gas and natural gas 14:51 Dana Gas: Moelis in the frame to advise liquids from its operations in Sharjah, and Kurdistan, up sukuk holders from its 2010 average of 55,000 barrels.

Story Victoria Robson (mergermarket subscriber), refer to However, past due payments from customers in Egypt and disclaimer on restrictions of use at the bottom of the page. that form the bulk of its business have placed a strain on the company’s cash resources. Creditors to Dana Gas, the UAE-listed energy company, are likely to appoint Moelis & Company to advise them in

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Get started now email [email protected] According to its financial statement, as of 31 March 2012, attraction for banks. It’s just a question of whether the relevant Dana had just AED 524m (USD 142.66m) in cash and bank company has sufficient moveable assets that can be easily balance. Trade and other receivables totaled AED 1,987m, of secured to make it worthwhile,” he said. which AED 977m had been due for more than 120 days. Publicaly listed players in the UAE with moveable assets by Samuel Potter include contractors Arabtec Holding and Drake & Scull International, and Dana Gas and National Marine Dredging. To be used for the internal business of the assigned users only. Sharing, distributing or forwarding the entirety or any part of this article in any form to anyone that does not have access under your agreement is strictly prohibited and doing so violates your contract and is Key to the success of the new legislation would be the considered a breach of copyright. Any unauthorised recipient or distributer of this article is liable to dealReporter for unauthorised use and copyright breach. ease and affordability of the cost of registering security over moveable assets, and the accessibility of the secured assets Source dealReporter register to lenders, said Abraham.

02-Aug-12 by John Everington 16:37 UAE drafts new law on pledges against To be used for the internal business of the assigned users only. Sharing, distributing or moveable assets forwarding the entirety or any part of this article in any form to anyone that does not have access under your agreement is strictly prohibited and doing so violates your contract and is Story Victoria Robson (mergermarket subscriber), refer to considered a breach of copyright. Any unauthorised recipient or distributer of this article is liable to dealReporter for unauthorised use and copyright breach. disclaimer on restrictions of use at the bottom of the page. Source dealReporter The UAE Ministry of Finance has begun drafting new legislation to facilitate loans pledged against moveable assets, 14-Aug-12 said Mazen Boustany, head of banking and finance at Habib 15:23 BankMuscat yet to appoint advisors on Al-Mulla, who is assisting with its drafting. USD 150m private placement - sources The new law is designed to enable companies to borrow Story Victoria Robson (mergermarket subscriber), refer to against moveable assets such as machinery, office equipment, disclaimer on restrictions of use at the bottom of the page. vehicles and intellectual property, in order to stimulate the investment climate in the UAE and to encourage bank lending, BankMuscat, the largest, listed bank in Oman, has yet to said Boustany. appoint advisors to manage the USD 150m private placement of its shares, two sources familiar with the situation said. “Banks are currently not secured when lending against moveable assets and are therefore very reluctant to do so. The “The bank has not appointed anyone so far. Nothing has been new law will create a registry where you have to register the done on that [transaction],” one source said. pledge and the moveables, which anyone can check, so you BankMuscat is raising cash to strengthen its Tier 1 capital and wouldn’t be able to pledge again against an asset or to sell the placement will take place at the end of the fourth quarter these moveables,” he said. of this year with an international institutional investor, reports The Ministry of Finance is drafting the new law in conjunction cited BankMuscat chief operating officer Ahmed al Abri as with the International Finance Corporation, the World Bank’s saying. private investment arm, said Boustany. Work on the new It is likely that BankMuscat will have to appoint an outside regulations is at an early stage, with new laws and regulations manager to manage the private placement as the Capital unlikely to emerge until 2013 at the earliest, he said. Market Authority (CMA) in Oman bars Although legislation on pledges against moveable assets is units of the listed lenders from handling such transactions, the typically introduced to enable SMEs to be able to borrow source pointed out. money against non-real estate assets, the law has applications The second source however said it is possible the CMA could for borrowing by larger corporate entities, Boustany said. allow the lender’s investment banking unit to manage the The new legislation is unlikely to affect lending to real estate transaction as it is only a private placement and not a public entities such as Nakheel and Dubai Holding, but may impact transaction. lending to companies in more industrial sectors, said Robin Both sources were not aware whether BankMuscat has Abraham, a partner with Clifford Chance specialising in finance. already received pitches from the outside advisors. However, if “If the new legislation is going to make it easier to take the transaction is to take place within the indicated time period, security over movable equipment and assets such as cranes the lender should start the process of appointing advisors soon that a company possesses, you could definitely see the after Eid holidays, the first source noted.

www.dealreporter.com A spokesperson for Bank Muscat could not be reached for a comment.

This the second time BankMuscat is choosing to raise capital through a private placement of shares. The bank in November 2007 sold its 15% stake in a OMR 238.3m (USD 619m) private placement to Dubai Financial Group, a subsidiary of multi-line conglomerate Dubai Group.

BankMuscat on 22 July also concluded a USD 252.1m rights issue. Gulf Baader Capital Markets was appointed as the issue manager while BankMuscat acted only as one of the several collection banks, the lender said in a 6 August stock exchange filing.

The rights issue was 1.27 times oversubscribed. However, Dubai Group, which is undergoing its own USD 10bn debt restructuring, did not subscribe to the issue and sold its rights on the Muscat Securities Market (MSM), according to reports.

The proceeds of the rights issue will be utilised by BankMuscat for financing growth resulting from the credit expansion; capitalising its Islamic banking business; and enhancing capital adequacy ratios, as reported.

A number of Omani financial institutions this year have tapped the debt and equity capital markets to meet the Central Bank of Oman’s requirement to maintain a minimum capital base of OMR 100m. The conventional banks have been asked to allocate a minimum capital of OMR 10m for their Islamic windows, according to reports.

BankMuscat has a market capitalisation of USD 2.7bn. by Sarmad Khan

To be used for the internal business of the assigned users only. Sharing, distributing or forwarding the entirety or any part of this article in any form to anyone that does not have access under your agreement is strictly prohibited and doing so violates your contract and is considered a breach of copyright. Any unauthorised recipient or distributer of this article is liable to dealReporter for unauthorised use and copyright breach.

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