Kuwaiti investment firm Al Ahlia Holding Company is seeking loans of up to 45 million dinars (Dh576m) to refinance debt and expects a 2008 loss as it books provisions to weather the downturn, its chairman said.
Abdullah Al Awady said the company had cancelled deals for local real estate projects worth KD230 million in the fourth quarter of 2008 to prevent further losses amid a credit crunch hitting the oil exporter.
“Part of that... was assuming debts up to KD130m... things have escalated and we chose to cancel the [whole] transactions,” he said.
Al Ahlia is in talks with local and international banks to get loans of KD35-45m. “We are working on restructuring our current debt, pushing it for at least two to five years,” he said in an interview.
Awady said local banks were reluctant to lend until parliament approves a $5 billion stimulus package, which would offer state guarantees for fresh loans given to investment firms to help refinance debt.
“We have gone to [local] banks and we have offered 200 and 300 per cent coverage and they said: wait,” he said.
Several Kuwaiti investment firms have said they need fresh loans or are considering selling assets to raise funds. The firm expects 2009 to be a difficult year for the real estate sector in Kuwait, whose stock market fell about 14 percent this year, and sees a recovery only in 2010.
“Real estate markets usually lag behind equity markets by approximately six to nine months in effects,” he said.
“We expect to see a very drastic downturn during this year [for real estate], it should correct itself into 2010.”