NREC eyes Islamic bonds

01/06/2011 00:00 AST

Kuwait's National Real Estate Co. (NREC) is looking to sell conventional or Islamic bonds to reschedule debt, its chief financial officer said.

NREC, which owns a 22.4 percent stake in Kuwaiti logistics firm Agility, is also trying to sell some of its non-core investments to reschedule 200 million dinars ($727 million) of debt, Ahmed Harfoush told Reuters in an interview late on Monday.

He said that the firm is in talks with consultants about a bond sale but said the project was still at the early stages.

"It is still an idea, and depends on market conditions... We are still studying this matter to be able to refinance our existing facilities, so we can give ourselves more time to repay our debts, and could in turn execute our exit from our non-core business assets, or develop our big projects," he said.

Harfoush said that the firm has pieces of land in Tunisia, Lebanon and Jordan that it wants to sell to raise cash.

The company's main goal is to complete a real estate project in Abu Dhabi's Reem island in the United Arab Emirates, which is facing financing problems, he said.

"We are facing a scarcity in financing since the 2008 financial crisis. All banks in the region are skeptical about any real estate project especially when it's not developed yet," Harfoush said.

NREC is developing The Reem Mall and Carina Views residences project, according to the firm's website.

NREC reiterated it had no plans to sell its stake in Agility. It said earlier this month it was one of the firm's "most important strategic" investments.

"Even if we thought about selling now (investment in Agility), we are not expecting to get a fair price for the firm due to the skepticism about the US case... If there is an intention to sell in the future, then this is up to the management," Harfoush said.

In March, a US court ruling against Agility dealt a blow to Agility's fight against charges it defrauded the US Army in multibillion-dollar contracts.

Agility, formerly Public Warehousing Co., was the largest supplier to the US Army in the Middle East during the war in Iraq and the case is politically sensitive in both Washington and Kuwait.

The court said prosecutors correctly served Agility with an indictment in 2009 when it accused the company of overcharging the Army over 41 months on $8.5 billion in supply contracts first signed at the start of the Gulf War in 2003.

Reuters