Manama/Zurich: Cash reserves at the Bahraini issuer of the $190 million Villamar sukuk slumped in 2009, the annual report showed yesterday, just days the after company said it would seek to de-list the sukuk from the bourse.
Cash reserves at Residential South Real Estate Development Company plunged to 5.45 million Bahraini dinars ($14.5 million, Dh53.3 million) at the end of 2009 from 42.3 million a year earlier, increasing concerns that the company could face a cash crunch.
"They have to spend money to finish the project but there is little left, and that means they will struggle to make future sukuk payments unless they can make some off-plan sales," said one banker familiar with the situation. "But off-plan sales have vapourized since the end of 2008."
Regional investors were further shaken last month when Kuwait's International Investment Group defaulted on a $200 million sukuk, or Islamic bond.
The April 25 request to de-list Villamar from the Dubai exchange had already raised concerns that the issuer might be seeking to renegotiate future payments while avoiding regulatory disclosure requirements.
"By delisting the security, the company might be able to sidestep reporting requirements," said the banker, who asked not to be identified as he works in the region.
The delisting would come as a blow to investors in the Bahrain Financial Harbour development, which includes Villamar. "It looks like a continuation of the problems these real estate groups are having," said one analyst who asked not to be named.
