Gulf Finance House (GFH) has clarified that its move to cut the nominal value of its shares is to reduce a large portion of the accumulated losses from the company’s books, a statement said.

GFH plans to reduce the nominal value of its shares from $0.3075 to $0.265 per share.

In the statement, GFH said it was issuing the clarification with reference to its published EGM agenda and the subsequent rumours circulating the markets.

“By reducing $0.0425 per share from the current share nominal value, GFH will be able to reduce the accumulated losses by $134,380,324. We believe this reduction will reflect positively on the bank, and ultimately increase shareholder value in the near future.  GFH believes that the ‘current share market-price’, which already has factored-in the total accumulated losses, should not have an impact as there is no reduction in the number of total outstanding shares,” it said.

The statement said the sukuk or a similar scheme proposed to raise up to $500 million shall be used largely for refinancing the existing debt and obligations that reach $280 million, which is currently distributed on four different syndications‎ / with high cost and over collaterals.  This will allow the bank to unify the counter parties, reduce cost, and unfreeze assets under the collaterals, it said.

“The remaining part of the facility will be used for inorganic growth for the bank through acquisitions and for developing projects – these steps are anticipated to provide the required growth impetus to the bank and would be highly beneficial for the bank’s balance sheet and ultimately to its shareholders,” the statement added. – TradeArabia News Service