North Africa/Middle East

Three international banks that backed out of $10 billion debt restructuring talks with an investment company controlled by Dubai's ruler said Thursday they are now pursuing legal action against the firm, dashing hopes of a consensual deal, The Seattle Times reported on an Associated Press story. The move by Britain's Royal Bank of Scotland, Commerzbank of Germany and South African lender Standard Bank will likely further complicate Dubai Group's efforts to move beyond its debt troubles after more than a year and a half of negotiations with creditors.

Shareholders in Kuwait's Global Investment House approved on Sunday a final plan to create new special purpose vehicles that will carry the company's debt as part of the $1.7 billion debt restructuring plan, Reuters reported. Global, which is undergoing its second debt restructuring in three years, will create at least two SPVs, one to hold company assets along with a debt of $1.3 billion and one which will take part in a capital increase for the parent company and which will carry a debt equivalent of $430 million, Managing Director Maha al-Ghunaim told a news conference.

Barclays Plc (BARC) faces a criminal probe into fees it paid in 2008 to Qatar’s sovereign wealth fund as the bank sought to raise money to avoid a government bailout, Bloomberg reported. The Serious Fraud Office, which prosecutes bribery and white-collar crime, told the London-based bank it has “commenced an investigation into payments under certain commercial agreements between Barclays and Qatar Holding LLC,” the lender said in a statement today. The investigation is another legal pitfall for Britain’s second-biggest lender by assets after it paid U.S. and U.K.

A Dubai court sanctioned the $2.2 billion debt restructuring of Drydocks World LLC, the Middle East’s biggest shipyard, after creditors approved the plan, Bloomberg reported. The ruling by the special tribunal said 97.8 percent of Drydocks’s creditors agreed to the terms. A government decree allows the tribunal to enforce a restructuring proposal if at least two-thirds of the creditors agree to it. Drydocks World, part of the state-controlled Dubai World group, filed an application to the Dubai tribunal in April to block lawsuits after failing to win support from all lenders.

Distressed Kuwaiti investment firms might increasingly resort to debt-for-equity swaps and principal reductions to cut their debt load as they continue to struggle with high levels of leverage and depressed real estate and stock valuations, Reuters reported on an International Financing Review story. Hit hard by the financial crisis of 2008, most of Kuwait's investment firms have traditionally resorted to maturity extensions to avoid default.

Fal Oil Company’s attempts to restructure debts of around AED 4bn (USD 1.1bn) and raise USD 650m in new working capital have been dealt a blow by the loss of oil acting as security for Standard Chartered Bank, according to a source familiar with the situation and three creditors, the Financial Times reported. The development prompted Standard Chartered, the chair of Fal’s creditor steering committee, to tell the committee it is rejecting the company’s request for new working capital, the source and one creditor said.

Egypt's new government hopes to secure a $4.8 billion loan from the International Monetary Fund before the end of the year, government officials said, in a fresh effort to heal the country's ailing economy, The Wall Street Journal reported. At a news conference on Wednesday following meetings with President Mohammed Morsi and his senior economic team, Christine Lagarde, the IMF's managing director, said the global lender would return to stalled negotiations.

Global Investment House, the Kuwaiti investment firm undergoing its second debt restructuring in three years, will seek shareholders approval for a debt-for-equity swap which if approved will see creditors own 70 percent of the company, Reuters reported. The proposed plan, which will see the remaining debt met by assets transferred to the creditors, would be a rare example of debt-for-equity being used in a Gulf Arab restructuring.

Middle East trader FAL Oil, in talks with creditors on $700 million in debt, is on the cusp of hiring a chief restructuring officer to keep the faltering discussions on track, sources familiar with the matter said on Sunday. United Arab Emirates-based FAL, once one of the biggest regional fuel oil traders, has been forced to cut its fuel oil and bunkering operations in the UAE by as much as 60 percent and shut its trading operations in Singapore and London.

Dubai Group LLC’s creditors are seeking an option to be repaid early as the investment company controlled by Dubai’s ruler reorganizes $6 billion of bank debt, according to three people familiar with the talks, Bloomberg Businessweek reported. Under the early exit proposal for the 10-year debt restructuring, banks can choose to be repaid the market value of their loans after five years, said two of the people, who asked not to be identified because the information is private.