Kuwaiti Aston Martin owner nears $3.5b debt restructure

23-Dec-2009 • Bond News

Kuwait's Investment Dar, co-owner of British luxury carmaker Aston Martin, is close to clinching a deal to reschedule about one billion dinars ($3.5 billion) of debt, persons familiar with negotiations with creditors said Wednesday.

Dar and a creditor committee had asked banks and investment companies to voice their support for a proposed debt restructuring plan by Dec. 23 after presenting the plan at meetings in Dubai and Kuwait last month.

Dar and the committee are looking for approval from at least a two-third majority of creditors in order to finalize the five-year debt rescheduling plan, the persons said.

"Those who have signed and want to sign are about 70% of the creditors," one person familiar with the plan told Zawya Dow Jones.

Dar is expected to sell most of it assets to pay its debts after saying in May it had defaulted on a $100 million Islamic bond, or sukuk, as the Islamic investment firm ran into trouble due to the global financial crisis.

A nine-member committee representing creditors and banks, including HSBC Holding PLC (HSBC.LN), was set up to arrange the restructuring of Dar's debt.

"Things are looking positive and some more time may be needed to turn the oral yes into paper," another person familiar with the plan said.

Dar and committee officials declined to comment.

Dar is the second major company in Kuwait to announce a default after Global Investment House, the country's largest investment bank, defaulted on most of its debt in 2009.

Global signed earlier this month an agreement to reschedule about $1.73 billion of debt over a three-year period after defaulting on a loan a year-ago.

The company's assets include a 50% stake in Aston Martin, the car maker made famous by the British spy character James Bond.

Dar, its Kuwaiti partner Adeem Investments and a consortium of British and American investors bought Aston Martin from Ford Motor Company in 2007 for around GBP500 million, according to Dar's website.

Other assets include stakes in Grosvenor House Apartments in London and a 19.2% holding in Kuwait-based Islamic lender Boubyan Bank, which is currently under dispute with The Commercial Bank of Kuwait, the country's third-largest lender by market value.

Dar's proposed debt restructuring plan provides creditors "with an enforceable security package and the continued presence of a Chief Restructuring Officer," Dar said earlier this month

The proposed plan requires Dar to make an initial payment in 2010, which is expected to be about 10% of total debt, one person familiar with the plan told Zawya Dow Jones.

Dar's assets are expected to be moved to two or more holding companies, in order to be sold, the person said.

"After securing approval from the majority of creditors, the next step is to start implementation, set up the holding companies, draft a legal agreement," the person said.

Dar hired Credit Suisse earlier this year to provide advice regarding its financial strategy and debt restructuring, while its creditors have named Morgan Stanley as technical advisor on the debt rescheduling.

Dar's shares were suspended from trading in April for failing to report earnings on time. The company is currently in a dispute with the Central Bank of Kuwait, which hasn't approved its results for 2008.