The Gate Sukuk bond issue for $150m launched

The arrangers were the 3 major leading banks in Qatar, QIB (Qatar Islamic Bank), QNB (Qatar National Bank) and Commercial Bank of Qatar (CBQ), and the tour took place on the 26th, 27th and 28th November 2007 in Doha, Bahrain and Dubai respectively.

General Manager of Salam Bounian, Mr. Yasser Hamad

"In May 2007, Salam Bounian signed the Sukuk Financial deal for The Gate project and in November 2007 all the necessary documents were issued and completed for the Sukuk bonds. By the end of November 07, Salam Bounian was on a road show to Doha ,Bahrain and Dubai.

In light of the current speculations on the local currencies status to the $ and although the road show took place during a very prominent financial conference in Dubai it still enjoyed very good attendance and response from the investors.

The purpose of the Sukuk is not just to finance The Gate project because the three leading banks underwritten the whole Sukuk value and Salam Bounian up till now has already financed 35% of it. The main purpose was to market and introduce the project to the region and to build a strong financial network with the banks for future projects."

The Sukuk issue amount is $150m with a maturity period of 10 years and callable after 5 years. The proposed structure is based on a Musharaka arrangement under which the Musharaka will utilize contributions from the Issuer and Salam Bounian to finance the construction costs for the development of The Gate.

The issuer will be established as a special purpose company to issue the Sukuk and act as investor partner in the Musharaka.

Irrespective of current speculations on the local currencies status with respect to the US dollar, and in view of the considerable response it had while on tour, Salam Bounian still believes that The Gate Sukuk offering is lucrative and attractive to the various investors for the following reasons:

1. The collaterals being the mortgage on the land, where The Gate is being developed, in favor of the Issuer. This land is valued at $194,000,000, during the construction work and on completion of the project, the value will increase to $404,510,640.

2. The project is situated in a prime and unique location in the heart of the new prestigious business and commercial West Bay area, offering street facing, massed high end retail and offices. Within a 3 kilometers encashment area of The Gate, there are in total a 188 high rise towers completed, under construction or planned for. Those towers are hotels, private residences, offices and commercial entities that will accommodate approximately 138,000 people who will be potential customers for The Gate.

3. The Sukuk financial terms and conditions are quite favorable.

4. The joint lead managers of the Sukuk are the three leading banks in Qatar, namely QIB, QNB and CBQ who have an excellent track record in the region for delivering lucrative financial products.