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International law firm Trowers & Hamlins has advised KHCB Tier 1 Sukuk Limited (KHCB) and the Certificate holders, on the redemption of the outstanding USD159,151,000 Additional Tier 1 Capital Certificates which constituted Additional Tier 1 Capital of Khaleeji Bank.

KHCB had issued USD 159,151,000 Additional Tier 1 Capital certificates (the Certificates), which constituted Additional Tier 1 Capital of Khaleeji Bank.

As a strategic matter, KHCB opted for early redemption and cancellation of the Certificates by exercising a call option by way of partial conversion of the Certificates into equity shares of Khaleeji Bank and partial cash redemption on 28 March 2024. Trowers was responsible for advising KHCB in modifying the existing terms and conditions of the Certificates to allow an early exercise of the call option. 

The admission of the Certificates to trading on the International Securities Market of the London Stock Exchange plc stand cancelled as on 3 April 2024.

This was a matter of strategic importance for the various stakeholders engaged in the deal and involved Trowers & Hamlins advising on various regulatory and process related aspects, bringing all stakeholders to commercial agreement, liaising with the Central Bank of Bahrain, Bahrain Bourse, Bahrain Clear, London Stock Exchange plc and the clearing houses, to ensure that the parties were able to achieve their commercial intention in a timely manner. The various regulators and authorities involved were extremely supportive on the various regulations and process related matters, contributing to the timely closure of the redemption and cancellation.

The Trowers team was led by Partner and Head of Islamic Finance, Salman Ahmed with support from Jonathan Grosvenor (Senior Associate), Rashi Jain and Samer Almaz (Associates), and Molly Robertson (Trainee Solicitor).

Salman Ahmed, Partner and Head of Islamic Finance practice in Trowers & Hamlins, Oman commented:

"We are delighted to have advised KHCB on this important transaction. We are grateful for the trust placed in us by KHCB. This complex transaction required a deep understanding of capital markets regulations across a number of jurisdictions and the control rules in Bahrain, due to KHCB's activities as an Islamic bank. 

"The successful closing of this transaction allows KHCB to reduce its payment obligations under the Sukuk and strengthen its balance sheet through issuance of additional equity. This transaction demonstrates clear corporate benefits of innovative structuring and early engagement with the stakeholders. As a long-term partner of KHCB, we remain committed to supporting KHCB's future initiatives."

Amanullah Khan, Head of Finance & Administration at Khaleeji Bank, added:

“We are pleased to conclude this transaction under the guidance of Trowers & Hamlins, whose expertise and knowledge regarding capital markets was invaluable to us. The expedient redemption and cancellation of the Certificates reflects our firm commitment to supporting our shareholders and ensuring their consistent provision with the most positive experience with Khaleeji Bank. Going forth, we will continue to strive to maintain our position as a leading Shari’a-compliant bank in the Kingdom of Bahrain that offers unrivalled banking products and investment opportunities that guarantee positive returns and total client satisfaction.”