Kuwait's Investment Dar revises $2.7 billion debt restructuring plan

Indebted Kuwaiti financial firm Investment Dar is seeking court approval to help close a 813 million dinar ($2.7 billion) debt restructuring, according to an official document seen by Reuters. The new plan, called Dasman, is designed to overcome minority creditor dissent to earlier proposals by asking Kuwait's Court of Appeal to impose the deal on all creditors. The plan involves transferring Investment Dar's assets, and the management of their disposal, directly to creditors.
It is the latest effort by the company, which holds assets in sectors including finance and property, to pay off creditors after becoming indebted during the financial crisis.
The company was reorganised under Kuwait's Financial Stability Law, which was introduced in 2009 to assist corporate debt negotiations in the absence of effective insolvency rules.
After signing a deal in 2011 covering about 1 billion dinars, it paid off some creditors. Others took up a settlement-in-kind offer swapping debt for a share in a pool of assets, which included its stake in luxury carmaker Aston Martin.
But a subsequent debt-for-assets offer tabled last year was rejected by a minority of creditors. They included Kuwait Finance House, the Gulf state's largest sharia-compliant bank by assets, and the holder of about six percent of the debt that Investment Dar is seeking to restructure.
"What's different about this implementation process is that like the previous Financial Stability Law plan, no agreement from creditors is formally necessary as the court will impose the deal if the court supports the plan," Arun Reddy, director at Houlihan Lokey, an adviser to Investment Dar, told Reuters.
About 60 percent of creditors have voiced support for the new plan, said Investment Dar.
Under the earlier debt-for-assets proposal, creditors would have got shares in a holding company controlling a vehicle that owned Investment Dar's 35 to 40 assets. The new plan instead gives creditors direct control of the asset owning vehicle, shedding any legal links to Investment Dar.
"The assets will achieve a higher value in a creditor owned and controlled vehicle and the asset owning company will not be viewed as a distressed seller," said Reddy.
Investment Dar continued to defend legal action from a minority of creditors not supportive of the plan and who were pursuing claims against the company independently. It did not say which companies they were.
Kuwait's Supreme Court on June 17 rejected an appeal by Investment Dar against an earlier ruling to lift protection it had against legal action by creditors.