Kuwait Admits: "We're a Laughing Stock Now"

8 Jan 10:58am
Posted by ToddSullivan
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Like I said repeatedly, I don't think Kuwait thought their decision to cancel the Dow Chemical (DOW) deal all the way through and are only now beginning to recognize the damage they have done to themselves.

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From the Arab Times
MP Jamaan Al-Harbash on Tuesday asked his colleagues to conduct a thorough investigation on the Dow Chemical project, especially after the company announced its plan to take legal action against the state-owned Kuwaiti company which, sources say, might be asked to pay a fine of $2.5 billion for pulling out of the deal. Al-Harbash also urged the MPs to look into allegations that some people have earned commissions amounting to $750 million from the deal, conflict of interests, and unfair penalty clause. He also stressed the importance of determining the actual reason behind the decision of the Supreme Petroleum Council (SPC) to sign the deal only to withdraw from it later.

Proposing the formation of an investigative committee to look into the alleged violations, Al-Harbash stated “we have to find the truth to take the right decision on the issue. We must identify the people behind the violations and hold them liable for their acts as Kuwait has now become the laughing stock of the whole world due to this deal.”

No kidding.....

As for proof Kuwait still does not get it, Reuter reported yesterday,
"The state of Kuwait has undertaken all necessary measures to counter the case Dow Chemical is pursuing against KPC for not concluding a deal by Petrochemicals Industries Co with Dow," al-Watan quoted Commerce & Industry Minister Ahmad Baqer as saying.

Baqer did not elaborate.

Several Kuwaiti officials have told Reuters that under the agreement Dow would need a court ruling proving that Kuwait had violated the deal to qualify for a break fee.

Dow is not suing for a "breakup fee" but for damages due to breach of contract as CEO Andrew Liveris stated several times over the last two days. The two are very different things. Dow only needs to prove monetary damages due to the Kuwait action (will be easy enough) to be awarded a settlement. Although I think the real reason for the suit is to force the deal.




Disclosure ("none" means no position):Long DOW
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ToddSullivan

A Massachusetts based value investor, I look for companies whose current valuation is at a discount to their true value. When I purchase a stock, my typical holding period is several years. I consider buying a stock purchasing a piece of a business. I am confident once I make a decision to buy that eventually the market as a whole will recognize the true value of the business and value it accordingly. It may take 1 month, 6 months or a year, but if I buy it at enough of a discount to its true value my results will be (and have been) superior to the market as a whole. Of all the disparate investing disciplines, value investing has stood the test of time. The great investors of have all been value investors. Warren Buffett, Ben Graham, Bill Ruane (Sequoia Fund), Bill Miller and Wally Weitz, all have consistently outperformed the market for decades by using various forms of value investing. Currently I am a contributing writer to Seeking Alpha, Vinvesting.com, The Stock Masters and Value Investing News. Posts have been reprinted in The Wall St. Journal, Yahoo Finance, Google Alerts, Google Finance, TheStreet.com. 24/7 Wall St. and Topix.net.

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