Bahrain Mirror (Exclusive): Who issued the decision to lend the McLaren Company a £280 million loan (BD 131 million)? Why did this happen without guarantees? What are the consequences of this decision?
"The decision to lend McLaren Company has been taken outside Bahrain," a source from the National Bank of Bahrain said, stressing that the issue was not proposed to the bank's administration for negotiations.
News websites have confirmed that McLaren is poised to secure a loan from NBB to solve its cash-flow problems.
A financial analyst believes that the decision was taken by senior officials in the government. "A similar incident took place in 2008 when the Retirement Fund granted Arcapita Bank a $100 million loan to help it face the financial crisis."
"It is a big problem. Although the government is strict in applying the mandatory charter of corporate governance, it doesn't adhere to it," he adds.
There are no records in the Retirement Fund proving that the loan has been paid by Arcapita.
One of the conditions for the application of governance is to establish criteria that shape the relationship between the Board of Directors on the one hand, and shareholders and stakeholders on the other hand.
Dissident Ibrahim Sharif said that "the NBB loan for McLaren raises questions about the conflicts of interest given that Mumtalakt controls the bank and the company."
The NBB is 44% owned by the Mumtalakat Holding Company, Bahrain's sovereign wealth fund, which also owns 56% of McLaren.
McLaren is a British luxury sports car manufacturer, founded in December 1985.
"It is true that the Bank is still taking into account the decisions of the Basel III Committee regarding the volume of liquidity, but the decision to freeze the premiums for 3 months within a financial package to help citizens, and to involve the bank in a loan of this size will undoubtedly affect our operations in the future," a source in the NBB says.
The NBB is set to give McLaren a £280 million loan, about 131 BD million, without guarantees, after original creditors offered a loan on difficult terms to the company.
Ebrahim Sharif commented by saying: "McLaren spent £290m injected into the business by McLaren's shareholders after the pandemic, where will NBB get £300 million of difficult currency at a time we are complaining about our limited reserves?"
The company announced that existing shareholders had invested $369 million in the company, but said it needed a similar amount to help it cope with financial difficulties.
The difficulties McLaren faced made it dismiss 1,200 employees.
Confidence in the ability of the sports car manufacturer to overcome its crisis is pushing Mumtalakat to inject more money into McLaren.
Mumtalakat did not disclose the amount of facilitations it had provided to the company to help it cope with the effects of the pandemic.
Data confirms that the loan the company will receive from NBB will be with financial facilitations that take into account the new company's situation.
Regardless of its financial position, the decision to lend to McLaren was not made on the basis of a studied financial decision, but was taken quickly to meet the company's urgent need for a £280 million loan by mid next month.