Kuwait's Investment Dar, owner of half of luxury carmaker Aston Martin, proposed asset sales of about $1.69 billion over three years to creditors to restructure its debt pile, banking sources said on Wednesday.
Dar, as part of a $3.58 billion restructuring plan, will sell its stakes in Kuwait's Boubyan Bank and Bahrain Islamic Bank.
The 20 per cent Boubyan stake, whose ownership is under dispute, is valued at $752 million while its 40 per cent Bahrain Islamic stake is worth around $155 million, based on current market capitalisation.
Investment group Dar listed its Aston Martin stake as an asset in its restructuring document but did not outline any specific disposal plans, according to the banking sources, who attended the creditor meetings.
The Kuwaiti firm said this month it had reached an agreement with its core committee of banks for a plan that offers full repayment with profit over six to eight years.
Dar outlined its plan to creditors in Dubai and Kuwait this week. The bankers who attended the meeting spoke on condition of anonymity.
The restructuring proposal has not been agreed by Commercial Bank of Kuwait (CBK), one of Dar's largest creditors, a London-based source said.
CBK and Dar are in litigation over the Boubyan stake which Dar sold to CBK in 2008 to obtain funding, with the right to buy it back. In 2009, CBK said Dar had lost that right and tried to sell the stake on the open market, a move blocked by a Dar-requested court order.
"Boubyan is the most valuable asset they have now and they might need CBK on board if the restructuring has to go through," the source said.
A spokesman for Investment Dar declined to comment.
In its proposal to creditors this week, Investment Dar projected it would make $939.9 million from asset sales in the first year, $588.2 million in the second year and $157.8 million by the third year for a total of $1.69 billion.
The funds will be used to repay a proposed senior facility of $1.45 billion plus an annual profit payment in three-year time.
Dar, which plans to raise up to $71.2 million in fresh equity in the first year of the plan, said $21.5 million would be underwritten by key shareholders, one source said.
Creditors will own a 10-per cent stake in Investment Dar assuming the firm raises the new money, he added.
Dar's website lists Efad Group, owned by two prominent Kuwait families, and Kuwait's Public Institution for Social Security as major shareholders.
As part of its plan, Dar also intends to transfer $633.3 million in debt to a shareholder-owned special purpose vehicle.
Some bankers were sceptical about the plan's success, the second restructuring plan put to creditors.
"Even with this proposal, the details are still very vague," said one Dubai-based banker. "I would say there is still a lot of flexibility in terms of this offer. Anything could change."
Another banker who attended both meetings said there was more resistance among bankers in Kuwait but a sense of exhaustion over the proceedings has hit the group.
"This may be the very best offer we're going to get," the source said. "There is a real concern that the company will go into liquidation if we don't accept and I don't think that benefits anyone."
Dar, which appointed a new creditors committee in December after the previous one resigned, set a March 23 deadline for lenders to approve the deal.
That deadline precedes Dar's April 7 court hearing in Kuwait to determine its fate under the country's Financial Stability Law, sources said.
Investment Dar sought protection in March 2010 under the law, introduced by Kuwait's government to help local investment companies and banks that were hit by the global financial crisis.
If Dar is successful, the restructuring will be binding on all creditors including holdouts, the London-based source said.
Dar defaulted on a $100 million Islamic debt issue in 2009, the first on a major public Islamic instrument in the region.
Investment firms in Kuwait such as Investment Dar and International Investment Group are struggling largely due to a sharp fall in real estate values which led to massive erosion of their investment portfolios.