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Ithmaar Bank chairman Khalid Abdulla Janahi announced that the bank intends, as part of its capital-raising exercise, to offer a rights issue and launch a five-year mandatory convertible sukuk, the Islamic equivalent of mandatory convertible bond issue.
J.P. Morgan is assisting Ithmaar Bank with its capital-raising plans for the mandatory convertible sukuk.
Mr Janahi also announced that an agreement in principle had been reached with Global Emerging Markets of New York (GEM), whereby GEM would commit to provide an equity line of credit amounting up to $125 million which the bank will have the option to draw down over a period of five years at prevailing average volume and market prices, resulting in issuance of new ordinary shares.
"We have received the Central Bank of Bahrain's 'no objection' in respect of the mandatory convertible sukuk," said Mr Janahi. "As for the rights issue and equity line of credit, they will be subject to the approval of the regulatory authorities in the Kingdom of Bahrain. The benchmark size of the capital raising plans is between $400 million and $500 million. All the above will further strengthen our capital base and liquidity position," he said.
"This will, together with the recently announced reorganisation plan, put us in a privileged position to best capitalise on the opportunities that are now being created," said Janahi. "The plans are still subject to shareholder and regulatory approval and formal documentation," he said.
