MANAMA Gulf Finance House GFHB.BH (GFHK.KW) (GFH) plans to raise $250 million through asset sales this quarter, and has made lay-offs to cut costs after a regional real estate boom ended, its acting CEO said on Tuesday.
Ted Pretty told the Reuters Islamic Banking and Finance summit in Manama that the troubled investment house is in talks to sell its stakes in Khaleeji Commercial Bank KHCB.BH as well as its "energy city" real estate projects.
He said the investment house is in talks with banks, sovereign institutions and real estate developers and hopes to complete the sales by the end of the quarter.
Hard-hit by a property crash in the Gulf Arab region late in 2008, GFH escaped default on a $300 million loan this month by striking an eleventh-hour deal to roll over one third by six months.
GFH has said it is also in talks with lenders of a $100 million loan arranged by Liquidity Management Center (LMC) that matures in two tranches in March 2010 and March 2011, and Pretty said the investment house aims to replace it with a new two-year facility.
Bankers and analysts have said GFH needs to sell assets, including its 37 percent stake in Khaleeji -- which is worth about $130 million at current market valuations -- to avoid further funding difficulties.
"We have $420 million in assets identified for sale that we want to achieve in the next twelve months. We don't want to be forced sellers, but we want to have an orderly sale and exit them gradually over the year," Pretty said.
Pretty said that the stake GFH owns in the Bahrain Financial Harbour business towers was not included, but that GFH's stakes in Bahrain-based First Energy Bank, Qatar's QInvest and Asia Finance House were among these assets.
He also said that Salah Rahimi, head of GFH's real estate and infrastructure unit, left the bank, effective February10, and that the bank had laid off 35 employees since year-end.
Rahimi was a long-standing executive at GFH and his is the second high-profile departure, after previous CEO Ahmed Fahour, in a surprise move left, the bank in December after just five months on the job.
Job cuts at banks are a very sensitive issue in Bahrain and its investment houses have generally denied taking this measure, even though they have visibly reduced their operating costs.
Pretty said the bank plans to bring down its annual costs by 40-45 percent to below $80 million.
The investment house posted a 2009 loss of $728 million as its revenues from placing real estate projects fell close to zero and it cleaned its books of the legacy of the region's real estate crash.
Real estate projects, including the series the company called "energy cities" in Qatar, Libya, India and Kazakhstan, were GFH's main business line, by earning fees on the investor money it raised for the projects.
Pretty said GFH hopes to generate revenues this year by arranging financing for new financial institutions and setting up a new investment bank in Syria it is offering to investors.
"We're well advanced in obtaining (the license) through the proper approval process of the central bank of Syria," Pretty said, saying GFH was in talks with three potential investors.
(Reporting by Frederik Richter, Raissa Kasolowsky and Dinesh Nair; Editing by Rupert Winchester)