Kuwait Finance and Investment Company (KFIC), a KSE and DFM listed company, today entered into a five-year debt restructuring agreement with all lenders comprising 22 local and international financial institutions in one of the largest debt restructures of a non-government financial institution in the Gulf. With the agreement in place, KFIC will soon be concluding an organizational restructure to absorb the new business model and the company’s enhanced strategic outlook.
The debt restructure process, now concluded with the full backing of all lenders and majority shareholders, was initially kicked off before the crisis in early 2008 at the time with the objective of recapitalizing the company’s balance sheet and laying the foundations for a new robust business strategy. However, by fall 2008 the credit crunch had turned into a full-blown global financial crisis and, with this change in the market environment, the strategy had to be revamped over an 18-month process that concluded with today’s announcement.
KFIC Chairman Saleh Yacoub Al Homaizi said, "By signing the agreement into effect today, KFIC now has an improved capital structure with a greater financial flexibility and freedom. We are definitely a stronger and more focused business today, and we couldn’t have done this without the overwhelming support we’ve had from our shareholders and our lenders, who not only saw the value in our underlying business and our future prospects but have effectively bought into the long-term strategy for the company.
“The completion of this process is a milestone achievement. Coming to an agreement with 22 local and international institutions in a time of crisis was not an easy feat by any of the involved parties. The agreement took 18 months to engineer, and the support and advice we received from the two lead arrangers, the National Bank of Kuwait and Ahli United Bank, throughout the process was invaluable”.
Main elements of the agreement
- Universal agreement across the 22 local and global financial institutions on the terms of restructure
- Full backing of lenders and shareholders for company’s business strategy and plan
- Commitment by shareholders to raise capital during 2010
- Total debt portfolio of KD 145 are scheduled to be paid in four tranches, with the first settled on the day of the signing of this agreement and the last settled on December 31, 2014
- Valuation of all of the KFIC’s assets were executed by an independent third party, Ernst & Young, and were valued at an average rate of 15% above book value, adding to the company’s strength.
- Creates a cash-rich, highly liquid balance sheet.
Looking forward
As a result, KFIC is now a financial strong and cash rich business poised for growth and market leadership.
“Today, we are well on our way to building KFIC as a premier financial institution in a post-crisis world. We have finalized a complete balance sheet de-leveraging that places KFIC on the strongest financial footing in the company’s history.
“Moving forward we will continue to pursue superior returns for our clients and shareholders on minimal-risk opportunities that have the strength to weather through market cycles. This is a long-term strategy placed in late 2009 and has already performed per expectations as seen in our first quarter results. Asset management will remain as a core business line along with our investment banking practice as we look to widen our foot print in the region.
“Looking to the rest of the year, we will continue to bolster our balance sheet and expect our performance to gradually pick up with modest bottom-line earnings in line with the prevailing market conditions. We plan to reengage the market with products that deliver sustainable performance and investment opportunities that deliver superior risk adjusted returns to our clients and shareholders”.
