GGICO reports loss of nearly Dh1bn last year



Gulf General Investment Company (GGICO) reported a full-year loss of almost Dh1 billion for last year, compared with a profit of Dh197 million in 2009, and is seeking to restructure its debts.

In addition, the Dubai conglomerate said in a statement to the Dubai stock exchange it had "closed or exited" five of its subsidiaries, which were losing money. The company attributed the earnings decline to a drop in the fair value of equities held and impairments on property.

GGICO's remaining 19 subsidiaries were "performing well and will be further focused for organic growth", the company said. "The company has put in place a financial framework for long-term sustainable growth and as part of that has appointed HSBC Bank Middle East as its financial adviser for restructuring debts due to banks," it said. It did not provide a value for the amount being restructured. GGICO mainly buys and sells property but also manufactures prefabricated houses and trades a wide range of products including lubricants and perfumes.

Revenue fell 37 per cent to Dh2.94bn last year, compared with Dh4.71bn in 2009. Shares of GGICO, which are thinly traded on the Dubai Financial Market, were down 2.9 per cent to 29 fils yesterday. In January, the company said it would delay a US$300m bond issue to the end of the first quarter because the cost of issuing debt was too high.

The five-year bond was to be used for general corporate purposes and to trim short-term debt. Moody's Investors Service assigned a "B1" rating to the proposed debt issue, with a "negative outlook".

Two weeks ago, Moody's downgraded the company to "B2" and placed it "under review", meaning a downgrade was possible within three months. Three days later the company requested that Moody's terminate its coverage.

"The company's gearing is fairly high, and was reflected in our rating," said Franck Nowack, an analyst at Moody's in Dubai. "Most of the debt, worth Dh3bn, with local banks were mainly roll-over, short-term lines."

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