Bahrain's GFH agrees $110m sukuk restructuring

Bahrain-based Islamic investment bank Gulf Finance House (GFH) has obtained approval to restructure a $110 million Islamic bond, extending repayment for six years, the company said in a statement on Sunday. Sukuk holders worth 92 percent of the issue agreed to the restructuring plan, which will push out the maturity to June 2018, the statement said. GFH has been granted an initial two-year grace period for 2012 and 2013, meaning repayment will start in 2014, with the final instalment due in 2018. "We are targeting to extend the maturities of our debt over a longer term to retain our key assets," Hisham Alrayes, acting chief executive officer of GFH, said in the statement. According to GFH's first-quarter financial statements, the restructured sukuk - originally due to mature in June - would carry a minimum profit rate of 5 percent above the London Interbank Offered Rate. No pricing terms were given in Sunday's statement. The sukuk was originally priced at a spread of 175 points over LIBOR. Alrayes was appointed in April to replace Ted Pretty, who left last year after failing to return the firm to profitability. GFH was repeatedly forced into restructuring obligations in 2010 as the firm struggled with its debt burden in the aftermath of the global financial crisis. It approved a highly-dilutive recapitalisation plan in November 2010, which included a 75 percent capital cut to absorb accrued losses and a $500 million offering of a murabaha instrument to new investors to raise funds. A murabaha is a cost-plus-profit arrangement which complies with Islamic law.