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Capital Markets

Debt restructuring: TID moves closer to agreement

Two-thirds of banks and investors with an interest in Kuwait’s The Investment Dar (TID) approved a restructuring programme on December 24, allowing a deal to proceed.

A new five-year plan was presented to TID’s banks and investors at the end of November in Kuwait and Dubai. The programme gives financiers enforceable security, according to TID. A chief restructuring officer will also remain in place.

TID became the first Middle Eastern company to default on a sukuk when it missed a $100 million payment in May 2009. TID’s restructuring, on which Credit Suisse is advising, has been carefully watched, as it could provide important precedents in Islamic finance.

The restructuring has been complicated, as new principles have had to be found to maintain Shariah compliance. Interest obligations, debt-for-equity swaps and even the concept of a group of creditors have had to be replicated in a manner that is acceptable to Islamic scholars. But many TID financiers are more familiar with procedures used in conventional finance.

"TID is committed to completing the proposed restructuring as quickly as possible," said Adnan Al Musalam, TID’s chairman and managing director, in a statement at the end of December.

The entire financing of TID, Kuwait’s largest Islamic investment company, amounted to an equivalent of $3.6

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