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Gulf Finance Says Obtains Approval for Sukuk Restructuring

Gulf Finance House E.C., a Bahraini investment bank implementing a recapitalization plan, said it obtained approval from sukuk holders to restructure $110 million of debt.

Holders of the Islamic bonds agreed to extend the maturity to June 2018, with a two-year grace period for the principal repayment amount in 2012 and 2013, the lender said in an e-mailed statement.

“With the approval to restructure Gulf Finance House’s sukuk, we are now in a better position to accelerate growth initiatives for the future,” acting Chief Executive Officer Hisham al-Rayes said, according to the statement. “We are targeting to extend the maturities of our debt over a longer term to retain our key assets.”

Gulf Finance’s floating rate sukuk was due July 26 with an outstanding payment of $137.7 million, according to data compiled by Bloomberg. The bank sold the five-year Islamic bonds in 2007 at 125 basis points over the three-month London Interbank Offered Rate. The rate was increased by 50 basis points after the bank’s investment grade was reduced to junk, according to the data.

The lender said on May 15 first quarter-profit dropped 92 percent to $1 million from $11.9 million in the same period last year.

Gulf Finance House shares dropped 1 percent to 49.50 fils at the close in Kuwait City today. The shares, also listed in Dubai and Bahrain, gained 22 percent in Kuwait Stock Exchange this year, compared to a 10.45 percent rise in the benchmark index.

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