Bahrain’s GFH Eyes Share Capital Reduction, Convertible Sukuk

Bahrain-based Gulf Finance House will seek shareholder approval later this month for a potential reduction in share capital and to issue a convertible sukuk of up to $500 million to restructure debt and fund new projects.

The Islamic investment firm, whose unit is in the process of selling a majority stake in English soccer club Leeds United, was repeatedly forced into restructuring debt as the firm struggled in the aftermath of the global financial crisis.

Under the proposal, GFH will reduce the nominal value of its shares by 13.8 per cent to $0.265 per share from $0.3075, according to a notice on GFH’s website. As a result, paid-up capital will be cut to $837 million from $972 million.

GFH also aims to issue convertible sukuk worth up to $500 million to restructure current liabilities, develop projects and fund possible future acquisitions, subject to shareholder and regulatory approval. No timeframe was indicated for the potential offering in the statement.

The proposals will be discussed during its annual general meeting on March 31.

The investment firm made a net profit of $5.2 million in the three months to Dec. 31, up from $2.5 million in the prior-year period. For the 2013 full year, GFH’s net profit fell 37.2 per cent to $6.3 million.

GFH, through its Dubai-based subsidiary GFH Capital, agreed to sell 75 per cent of Leeds United to Italian Massimo Cellino last month, subject to the takeover being sanctioned by the Football League governing body.