Saturday, 24 June 2006

Among the many problems - laden file of the Saudi Livestock Co. with its creditors is the case known as Al-Ghamdi sons which involve the heirs of (the late) Ahmed Al-Ghamdi dispute with Souliman Al-Moukairish, former chairman of the board and currently largest share-holder of Al-Mawashi lasting more than 12 years.

As sources closed to Al-Ghamdi sons told the Saudi Gazette it was during the early beginnings of Souliman Al-Moukairish Co. (early 1989) that Al-Ghamdi long-term rented large land holdings to Souliman Al-Moukairish to be used as stables for livestock once they are loaded from importing ships. It was the (undocumented) understanding that Ahmed Al-Ghamdi would receive royalties for the land-use through commissions (discounted livestock prices). Al-Ghamdi was allowed to sell livestock in the south as a prerogative market. "It was a mutual concession both parties found it advantageous," the source said.

The business went satisfactorily for both parties until 1993 when Al-Moukairish unwillingly entered into partnership with Prince Al-Waleed Bin Talal. Al-Moukairish understanding was that the royalties received by Al-Ghamdi were more than enough to compensate for the land soaring values, so he claimed them as company property in the partnership documents. Al-Ghamdi, on the other hand, thought the commissions were due-returns for diligent work in expanding Al-Moukairish livestock market share in the south. Independent witnesses under oath, later stated in courts, Al-Ghamdi always maintained, in the eyes of buyers, his status as a commission- distributor for Al-Moukairish.

The case first came to courts in 1996, during the life of Ahmed Al-Ghamdi and he won a ruling to reclaim the lands. Al-Ghamdi sons, later, presented audited records to courts showing what their father could have gained through selling livestock was far less than the-then value of their lands (as heirs) and expressed willingness to settle whatever claims Al-Moukairish may have against their father as long as the lands are reclaimed. Al-Moukairish lawyers objected and took the appeals-route to the Court of Grievances where they seem to be succeeding in convincing judges of the implicit nature of livestock-for-land dealing. Al-Moukairish lawyers have successfully argued that as land prices were rising neither party objected to the continuation of the concession-royalty understanding which establishes a de-facto acceptance by Al-Ghamdi sons. Al-Ghamdi sons, however, are hampered by internal disputes over other properties which lately opened the door to arbitration and possible out-of-court settlement. The disputed amount, in case compensation is accepted by Al-Ghamdi sons, in return for land, is about SR450 million.

The Week In Review
Trades during the week ending Wednesday (June 21) registered slow but steady gains throughout the week motored by an improvement in some market's heavy-weights (Al-Rajhi Bank, SABIC, STC and steady interest in Cements) coming at the anticipated flow of Q2 performance results early next month. Specialists believe the "heavy-weights" (mostly: Banks, major Petrochemicals, Cements, Telecoms and some services) should report an increase of no-less than 3.5% over Q1 reported results. They project steady price improvements so it's not too late for some selective buying.

Speculative stocks have also showed marked price gains (6.75% in our top 10 list) notwithstanding the risks associated and specialists believe they are not yet to fall from speculators' favors.

Market liquidity-flow indicators reflected steadiness where industry, services and agriculture continue to capture investors/traders interests (84% of total trades); a pattern not likely to change soon.

Market Preview
This week's prediction is presented by our colleagues from the Funds' Department at Al-Arabi Bank: "Steady growth in over-all trades' volume but erratic prices in the Aggie, Insurance and Services. Banks are to continue price improvements; in the banking sector the shares to follow are: Riyad, AlJazeera, SAMBA and Al-Bilad. In the Industrial sector: SAFCO, S. Industrial, S. Advanced, Pipes, Na'maa, Sahara, Ynsab and SPC. In Cements: Arab, Yamamah and Qassim. In Services; Real Estate, Shipping, Taiba, Jarir, Makkah, SRMG and Tihama. SEC, the Telecoms and insurance should show good in-flow of liquidity.

By Omar S Bagour

© The Saudi Gazette 2006