The Islamic investment house said in an invitation to a
shareholders’ meeting to be held on Oct. 31 it will ask shareholders to approve
a reduction of its paid-up capital from $625.8 million to $145.8 million due to
accumulated losses.
It plans a reverse share split with a ratio of four to one
to reduce the number of outstanding shares to 474 million from 1.89
billion.
Its shares last traded at an all-time low of $0.12 on
Bahrain’s stock exchange. On Sunday, it requested its stock be halted on the
Kuwait bourse.
After the consolidation and the capital reduction, the new
par value to be approved by shareholders would be $0.3075.
GFH relied on fees it charged on investor money raised for
private equity and property projects, a market that collapsed when the global
financial crisis triggered a regional property crash in 2008.
It posted a $728 million loss for 2009 and has since
struggled to pay back its debt as it failed to sell down illiquid property
assets and find a new business model.
It narrowly escaped default in February when it reached a
last-minute deal with lender to roll over a $300 million loan and now needs to
find fresh fund to finish the property projects it started from Morocco to
India.
GFH has asked the Bahraini and Kuwaiti stock exchanges to
halt trading in its shares pending approval of its capital measures from
shareholders.
It plans to raise up to $500 million in fresh funds through
a murabaha, an equity-linked Islamic money market instrument.
It said in the invitation the conversion price for the
instrument would be between $0.31 and $0.40 per share, a discount of 20-40
percent to the current market value after the consolidation of shares.
