Aayan signs debt restructuring deal

24/05/2011 00:00 AST

Kuwait's leading Islamic firm Aayan Leasing and Investment Co yesterday signed a KD205 million ($743.6 million) debt restructuring agreement with its creditors. After signing the agreement at the Sheraton Hotel, Aayan Director of the board Ali Al-Ghanem applauded the positive results after hectic negotiations with its creditors.

The firm has signed an agreement with nine creditors, seven of which are local, including Kuwait Finance House, Burgan Bank and Gulf Bank. According to the agreement Ayan will have to settle 62 percent of the total debts over the next five years while maintaining its right to run the management of Aayan. It can concentrate on the operational activities which will enable the company to boost its revenues.

Al-Ghanem pointed out that the negotiation process took a long time as they had to adhere to the new regulations of the Central Bank of Kuwait stipulating financial proportions for debt average and outer debts in addition to fast liquidity which is supposed to be in operation starting from June 2012. "All these factors played a major role in prolonging the finalization of the deal. This is not considered an agreement but a partnership deal between Aayan and the lending partners. This also reflects everybod y's confidence in Aayan's ability to honor its commitment and contributing to the economic growth," Al-Ghanem commented.

Al-Ghanem said that Aayan took considerable efforts to comply with the requirements of the lending parties by cutting off expenses and downsizing the staff. At the same time, the company worked towards enhancing its asset value by providing technical support to its sister organizations and subsidiaries to help notch up revenues in the light of the current circumstances. He mentioned that the company will concentrate on leasing as a main activity in the next business plan to boost its profits.

Fahad Ali Al-Ghanem, head of the follow-up committee for rescheduling said that the final plan for rescheduling included writing off 10 percent of the total debts, transferring 15 percent of the total debts into company stocks, increasing capital by KD10 million, cash settlement of debts with assets on par of with the debt amounting to KD51 million while keeping the option of repurchasing the stocks from the lenders.

Al-Ghanem pointed out that 62 percent of the debts were approved to be rescheduled and the door is open for the rest of the lenders to enter the plan until 16/6/2011. He pointed out that some of the foreign banks are planning to enter this plan, but still it needed more time to finalize its internal approvals.

Executive Director of Aayan Mansour Al-Mubarak said that the debt restructuring deal will allow the company to exert more efforts to implement the plan in a positive working environment. He asserted that during the last few months the company started to implement some aspects of the plan as for rescheduling expenses and management expenses in addition to the salaries. This has resulted in a drop in the employees' salaries amounted to KD7.5 million. In addition, the company has managed to bring down the general administrative expenses amounting to KD3 million, he added.

Kuwait Times