The Bahraini Stock Exchange suspended trading in shares of Manama-based Gulf Finance House on Tuesday as it waited for the bank to confirm or deny a media report, without providing further details.
GFH is trying to refinance debt due in the next few weeks and is looking to raise cash in case negotiations fail, sources familiar with the Islamic investment house said.
A source at one of the arrangers said that GFH had approached it to roll over or extend the arranger's portion of $300 million in financing, but that it had made no decision as yet and was monitoring the situation at GFH very closely.
GFH said in a statement on Tuesday it had met WestLB, a lead arranger for the loan, last week to discuss the terms of the facility, without providing details.
Like other Bahraini off-shore investment houses, GFH has been badly hit by the end to the regional real estate boom triggered by the bursting of the property bubble in Dubai late in 2008.
"We are comfortable about that," Chief Executive Ted Pretty told Reuters in a phone interview at the weekend when asked about the bank's $300m murabaha, or shariah-compliant financing instrument, due in February, but did not say if the bank would repay or refinance the loan.
Austria's Raiffeisen also acted as lead arrangers for that loan.
Pretty – acting CEO at GFH following the surprise December resignation of former chief Ahmed Fahour – said a $50m tranche of a separate sukuk, or Islamic bond, expiring in July 2012 was "in negotiation".
The sukuk was last quoted as trading at 71 per cent of par value, with a yield to maturity of 15 per cent, according to Reuters data.
Sources familiar with GFH said the bank had over the past days been approaching private investors to raise loans, pledging real estate and other assets as collateral.
GFH posted profit until 2008 mainly by earning fees on money raised from investors for large real estate projects, a market which has since collapsed.
It has posted losses over the last four quarters and raised $300m in a rights issue in October to shore up its balance sheet.
Ratings agency Standard & Poor's on January 14 downgraded GFH to B+ from BB+ and said further downgrades could follow due to its fragile liquidity situation.
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