Company's current liabilities stand at Dh686m as of March 31
Gulf General Investment Company (GGICO), which is working on a debt restructuring plan, has failed to pay bank loans worth Dh489 million as of March 31, 2011.
In its financial statement for the first quarter, the company said it had defaulted on the repayment of bank loans amounting to Dh489.2million while the non-current portion of the defaulted loans as at March 31, 2011 stood at Dh 685.9 million, which has been reclassified as current liabilities as per IFRS requirements.
The company did not respond to questions mailed by Emirates 24/7 till the time of publication of the story.
In March, Moody's Investors Service downgraded to B2 from B1 all ratings including the corporate family rating and the probability of default rating (PDR) of GGICO. The ratings were also placed on review for possible downgrade.
The rating agency is particularly focused on GGICO's continuing exposure to refinancing risk related to GGICO's perpetual roll-overs. It had anticipated that this risk would be partially addressed by the proposed issuance of notes by the end of Q1 2011, which had been postponed in Q4 2010 due to challenging market conditions and is now unlikely to occur.
According to the company, term loan facilities relating to buildings construction are secured by mortgage of properties and constructions financed by these loans. Banks providing these facilities are the first beneficiary from the properties and construction and have the right to receive the rental income from the buildings. In addition, insurance policies are endorsed in favour of these banks, reputation of the Group and irrevocable bank guarantee from other bank.
GGICO earlier said it has appointed HSBC Bank Middle East as its financial adviser for restructuring its debts and has closed or exited five of its operating subsidiaries. It has 24 operating subsidiaries in manufacturing activities and service activities, of which, most of them are performing well and is giving stability to the company.
In November, this website reported that GGICO was planning to raising $300 million (Dh1.1 billion) through a five-year bond issue.
© Emirates 24|7 2011
