The company early last year announced that it had
defaulted on a periodic coupon payment to certificate holders on its $150
million sukuk which fell due on
April 27, 2009 and which is will mature in 2010. Since then it has
embarked on a major restructuring plan involving some $3.49 billion of debt and
in March 2010 sought protection under the facility of the Financial Stability
Law (FSL) introduced by the Kuwaiti government to help qualifying Kuwaiti
investment companies and banks affected by the financial crisis.
Most of TID's creditors (up to 80 percent) are on board,
the latest one being Lebanon's Blom Development Bank, which earlier had
unsuccessfully sued TID in the high court in London to recover $10.7 million it
invested in the company in 2007, as well as a 5 percent return promised in the
terms of the Wakala agreement. TID's defense was that the transaction was not
Shariah-compliant.
However, Al-Musallam's reported remarks that the firm
invested in hard assets and will "make a strong comeback" after
restructuring must stand the test of time.
There is, for instance, some confusion as to whether TID
has indeed been included under the Central Bank of Kuwait's FSL facility.
According to Kuwaiti press reports, the Central Bank of Kuwait (CBK) in July
2010 applied for an additional four months to determine whether TID should be
allowed to enter the FSL process - a step that would give it Chapter 11
protection from further court actions in Kuwait.
The new extension period runs from July 10, which means that this
uncertainty can be drawn out till
Nov. 10, 2010.
The CBK should inject some transparency and certainty in
the FSL process. It is notorious for its bureaucratic and painstakingly slow
approach to regulatory and restructuring issues. Some Kuwaiti bankers remain
critical of the CBK's late involvement in the issue of troubled Kuwaiti
investment companies including TID, International Investment Group (IIG) and
the investment bank, Global Investment House.
The CBK should clarify to the market as a matter of
urgency the position of TID's inclusion to the FSL facility. The delay is
inexplicable because Ernst & Young, the international consultancy, had
finished both its preliminary and final report on TID's restructuring plans.
Unless of course the central bank either has reservations about the company's
current restructuring plan and its capacity to implement it, or plans to impose
several conditions on TID as a condition for inclusion in the FSL facility.
TID, which is one of the major shareholders of Aston
Martin Motor Company, the luxury British car manufacturer which it bought from
Ford Motor Company in 2007 in a deal in excess of 525 million pounds,
reportedly is also mooting a private placement for the company, which is valued
at 1 billion pounds. There is even talk of a tie-up with another car
manufacturer.
Aston Martin has however stressed that it is expanding
its sales in the GCC countries with Oman emerging as a new target market for
the iconic sports car with targeted sales of 10 per cent per annum over the
next five years of its Middle East sales market.
Other target markets include the US, UK, the European
Union, Russia, India, China, Brazil and the Middle East. - M.P.
