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Bahrain’s Arcapita to raise capital as $1.1. bln loan looms

Faces refinancing of $1.1 bln loan in Apr 2012.

January 18, 2011 11:52 by

Bahrain’s Arcapita , the Islamic investment firm that needs to refinance a $1.1 billion loan due next year, said it is conducting a rights issue to raise fresh funds from shareholders.

Arcapita was badly hit by the crisis as it struggled to exit its investments due to global investor woes and its fee income from raising fresh funds in the Gulf Arab region collapsed.

“We can confirm that we are conducting a rights issue that has been put to existing shareholders,” a spokesman for the company told Reuters.

He said Arcapita also plans to market the rights issue to new institutional investors in the Gulf Arab region, Malaysia and other parts of Asia.

He declined to disclose how much Arcapita is trying to raise but said the firm plans to close the issue by the end of March.

Several investment houses in Bahrain and Kuwait had to restructure their debt after a regional property crash in 2008 swept away their business models of raising finance for real estate and property projects.

Arcapita needs to refinance a $1.1 billion murabaha loan due in April 2012, on which German lender WestLB , Barclays  and Standard Chartered  were bookrunners.

IFR, a publication owned by Thomson Reuters, reported on Sunday that WestLB has sold $30 million of the $1.1 billion loan due in April 2012 to distressed debt firm Yorvik for 76 cents on the dollar, highlighting market concerns about the loan.

The spokesman said Arcapita will partially pay back the loan from its own funds and new debt it seeks from banks and seek to roll over the remainder.

Bankers say that while Arcapita’s balance sheet has been severed by the financial crisis they are not overly concerned about the future of the firm as it would likely receive government support if needed.

Arcapita is seen as one of the flagship companies for Bahrain’s investment sector and bankers say the ruling family of Bahrain has co-invested with Arcapita in Bahrain Bay, one of the largest real estate projects in the island kingdom.

The spokesman said Arcapita, that has $3.6 billion in assets, would exit more investments over the coming months, allowing it to return to profit.

“We’re expecting to make a profit for the year,” he said.

Arcapita posted a $559.4 million net loss for the year ended June 30, 2010.

(Reporting by Frederik Richter; Editing by Dinesh Nair)

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