Dubai-based Arabian General Investment Corporation (Agico, or SHUAA in Arabic) is planning to soak up losses dating from the early 1990s by cutting its share capital by about AED 80 million ($21.8 million) to AED 200 million ($54.4 million).
Agico, which has a range of investments in Arab countries and the West, is listed on the Kuwait Stock Exchange and traded over the counter in the UAE. As part of a capital restructuring, it is understood to be planning to reduce its shareholder base by buying back 10 per cent of its equity. Agico has about 10,000 Arab shareholders, most with small stakes. 50 per cent of its capital was originally paid-up and last year Agico relieved shareholders of the unpaid part, halving its capital.
The losses stem from the early 1990s, when Agico was an investor in a British financial services firm that went into receivership, general manager Iyad Duwaji said. The investment cost Agico £10 million, then equivalent to about MD 80 million.
‘We proposed to the shareholders to write down that loss against the share capital and not take it from the reserves,’ Duwaji told MEED. ‘We will end up with MD 200 million in capital and MD 50 million in reserves.’ It was not clear why the company carried the loss for so long before resolving it.
Agico’s assets fell to MD 262.8 million ($71.5 million) in 1995 from MD 315.2 million ($85.7 million) in 1994. This reflected a fall in short-term bank loans which were considered unnecessary because of the company’s liquid state, a statement from Agico’s board said. Total income fell in 1995 to MD 9.3 million ($2.5 million) from MD 14.6 million ($4.0 million) in 1994, and a large amount of this income went on extra provisions. If the accumulated losses are taken out of the equation, Agico made a small net profit for the year.
The company was due to hold an annual general meeting (AGM) in March. That meeting and a subsequent one were cancelled because they did not fulfil UM rules on reaching a quorum. A third AGM is likely in September.
Agico was set up in 1979 to invest in Arab countries. Over the last two years it has refocussed on the region, Duwaji says, and is currently looking at opportunities in Egypt, Jordan, Lebanon, Oman and the UM. It also has investments in other Arab states and Europe, including a stake in a hotel in Barcelona, which it hopes to sell after renovating it. It earmarked $15 million to invest in Arab public companies this year.