03/01/2005

Durrat Al Bahrain US $ 152.5 Million Variable Rate Sukuk – Due 2010

Manama, 3 January 2005 – Today represents a milestone for the Durrat Al Bahrain Project with the official signing of the Durrat Al Bahrain Istisna'a Ijara Sukuk (Durrat Sukuk) being completed today at the Ritz Carlton Hotel in Bahrain.

The Durrat Sukuk will finance the reclamation and infrastructure for the initial stage of a broader US$ 1 billion world class residential and leisure destination known as “Durrat Al Bahrain”, currently the Kingdom of Bahrain’s largest residential development project. The Project Company, Durrat Khaleej Al Bahrain, is equally owned by the Government of Bahrain and Kuwait Finance House Bahrain (KFH ).

Liquidity Management Centre (LMC) was mandated by the Project Company and Kuwait Finance House, Bahrain to act as the arranger and placement agent to the Sukuk Issue. As a shareholder of the Project Company, KFH Bahrain has also played a key role by overseeing the arrangement and placement process. Both LMC and KFH have expressed particular satisfaction at nearing the completion of the Durrat Sukuk issuance process.

Mr Aref A. Kooheji, Chairman of LMC, said “I feel the Durrat Sukuk reflects the current buoyancy in the Sukuk market as well as the viability of the Durrat Khaleej Al Bahrain Project. It is extremely positive to see Islamic financing instruments continuing to gather momentum in broader market place. The breadth of investors attracted to the Durrat Sukuk is ample reward for the extent and versatility of our marketing and placement efforts. On behalf of the organization, I would like to thank Kuwait Finance House for the faith they have in us throughout the transaction development process.”

Mr Ahmed Abbas, Acting Chief Executive Officer of LMC commented further that “We have been delighted with the support we have received from our shareholders as well as the Underwriters and other participating institutions. This is an economically significant project for Bahrain, with which we are proud to be actively supporting further growth in the domestic economy.”

The Issue was extremely successful and closed at US$ 152.5 million with US$ 32.5 million oversubscription. It was underwritten by Lead Underwriter Kuwait Finance House (Kuwait) in addition to eleven other leading underwriting financial institutions including: Dubai Islamic Bank, Bank of Bahrain and Kuwait, General Organization for Social Islamic Insurance (GOSI) Bahrain, National Bank of Sharjah and Arab Islamic Bank (Palestine). The return on the Sukuk is 125 basis points over 3 months LIBOR payable quarterly, with the Sukuk having an overall tenor of 5 years and an option for early redemption.

Kuwait Finance House (Kuwait) which equally owns KFH Bahrain and is a shareholder in LMC, has been instrumental in the current success of the Durrat Sukuk Issue by committing to act as the Lead Underwriter for the Issue at a very early stage. Mr. Mohammed S. Al-Omar, AGM Investments of KFH Kuwait said, “We are very hopeful of the complete success of the Durrat Project and this Issue is a first step towards achieving this objective. We are thankful to our co-underwriters/participants to the Issue for showing their trust and confidence in the Project and the KFH Group. We remain committed to the attainment of success of the Islamic Sukuk industry for which the Durrat Sukuk will be a significant contribution”.

It is LMC’s intention to have the Sukuk listed on the Bahrain Stock Exchange in order to facilitate its tradability.

About Durrat Khaleej Al Bahrain:

Durrat Khaleej Al Bahrain, the Project Company, was incorporated in 1999 for the purpose of development and construction of Durrat Al Bahrain Project. The Project Company is equally owned by Government of Bahrain and Kuwait Finance House, Bahrain. The Company is currently engaged in the implementation of the project plan in association with contractors and consultants of international repute.

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