Investment Dar, a Kuwaiti investment firm that owns half of the car maker Aston Martin, has defaulted on a US$100 million (Dh367.3m) Islamic bond.

The default, announced on the website of the Bahrain Stock Exchange yesterday, comes as the struggling company works to sell off assets and restructure its debt.

“Default has been made in the payment of the periodic distribution amount due to certificate holders on April 27 2009, and that such default has continued unremedied for a period of 14 days,” Investment Dar said in a -statement to the bourse.

Investment Dar said in March that it was looking to unload “non-core” assets to aid in its recovery, but had no plans to let go of its 50 per cent stake in Aston Martin, an English manufacturer known for its powerful yet luxurious cars.

About the same time, the company presented a restructuring plan to lenders, but negotiations over the terms of a potential reworking of the debt are still under way, according to news reports. As part of the restructuring, Investment Dar could refinance about a third of its estimated 1.08 billion Kuwaiti dinars (Dh13.65bn) of total debt that was outstanding last September, according to Bloomberg data.

Investors and lenders were assured yesterday that the sukuk default fitted in with the company’s previously announced restructuring plans.

“We are just giving notice to the lenders of Dar that there is an event of default,” an official at the firm told Reuters. “We are saying that all payments will be made according to Dar’s restructuring plan irrespective of the maturity dates which were previously agreed upon.”

Investment Dar came under duress when local stock and property markets turned sour because of the financial crisis and global slowdown. While the company booked large profits in the first three quarters of last year, it has not yet released financial statements for the final quarter, when analysts say it could have taken large losses.

The sukuk default mirrors the trouble experienced by another Kuwaiti company, Global Investment House, which triggered a series of credit downgrades and defaults when it failed to make a payment on a $200m loan in December. Global is also still negotiating with lenders over a reorganisation.

Despite Kuwait’s vast oil reserves, the country’s banks and investment firms have been some of the hardest hit by the financial crisis in the Gulf. Political turmoil has delayed a comprehensive bailout package, leaving Kuwaiti financial firms to fend for themselves as other governments in the region take aggressive rescue measures.

Investment Dar stock has fallen by about 93 per cent since its peak early last year.
“Investment firms in Kuwait have been affected the most by the credit crisis,” Nish Popat, the head of fixed income at ING Investment Management in Dubai, told Bloomberg. “The market has already priced in this default probability.”