NBQ refuses to cancel Dh2.36bn deal with Global Investment House

National Bank of Umm Al Qaiwan (NBQ) has refused to return $250 million (Dh918m) to Kuwait-based investment bank Global Investment House and is seeking instead to complete a debt conversion for which the cash was received as advance payment.

According to a July deal, NBQ would issue convertible bonds to Global for Dh2.359 billion. The deal set a premium of Dh6.15 per share over and above the face value of Dh1. NBQ's shares currently trade at about Dh4 on the Abu Dhabi Securities Exchange.

Global would have the option to convert the instrument into 330 million new shares of NBQ, which would expand the bank's paid-in share capital by 25 per cent and give Global a 20 per cent shareholding in NBQ.

Recently, however, Global sent a letter to NBQ seeking cancellation of the deal and asking for a refund of the advance paid.

"On legal advice, NBQ has taken the view that [Global's] request is not valid and the MoU is a binding sale purchase agreement. Accordingly, the bank is proceeding for completion of the transaction seeking the remaining payment due from [Global]," the bank said in its notes to the financial results of 2008.

Welcoming the conversion deal when it was struck, NBQ Chief Executive Sheikh Nasser bin Rashid Al Mualla had said: "We believe that Global being one of the most active investment companies in the region will add more value to NBQ in areas of asset management and corporate finance services."

The exercise would raise NBQ's paid-in capital to Dh1.65bn and shareholders' equity to Dh5bn.

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