IslamicFinance.de

Bahrain's Gulf Finance House (GFH) has announced the appointment of Kuwait Investment Co (KIC) to assist the Islamic lender with the recapitalization and raising up to $500m program through a convertible Murabaha as part of the restructuring plan agreed to by shareholders.

Bahrain'sc plans to restructure or sell assets to pay back $ 90 million in debt next year, a document showed, highlighting its struggle to meet obligations amid dried-up revenues.
The Islamic investment firm and other Bahraini investment houses have struggled to restart revenue growth, after a 2008 regional property crash pulled the rug out from under their business model of earning fees on investor money raised for private equity and property projects.
GFH posted a net loss of $ 40 million for the second quarter and did not book any income from investment banking services, the main income source during the region's five-year oil and property boom that ended in 2008.
Some large investors have indicated that they may wish to accept land in such projects as their method of exit," she also said. The investor presentation also showed GFH plans to cut its operating expenses by some 40 percent through the reduction of staff costs and funding costs. The firm slashed its staff costs by 66 percent during the first half compared with a year earlier, partly through lay-offs.

Gulf Finance House (GFH), the troubled Islamic investment bank based in Bahrain, wants to raise up to US$500 million (Dh1.83 billion) from investors after declines in Gulf property prices and the fracturing of its business model led to huge losses last year.
GFH was among the hardest hit in the region by the financial crisis and is one of many in Bahrain and Kuwait forced to restructure debts and rethink their methods for raising money, making investments and borrowing.
Shareholders are also to vote on a consolidation of shares through which four old shares would be exchanged for one new.
And the bank will seek a reduction in capital, which observers say will allow it to swallow accumulated losses and start paying dividends immediately after raising new capital. The consolidation would reduce the number of shares on the market but would not affect the company's market value.
Hit by a lack of revenues to finance its operations and pay debts, GFH was forced to reach new terms with creditors on hundreds of millions of dollars of debt.