Agility to boost cash position by cutting net debt
Kuwaiti logistics firm Agility says it is aiming to cut its net debt to zero this year.
Tarek Sultan, chairman of Kuwaiti logistics firm Agility, confirmed in an interview on Tuesday that the company wants to cut its net debt position to zero this year by boosting its cash position as access to credit become even harder.
Sultan said the Gulf Arab world's biggest logistics firm could exit from some of its investments, including Iraq's Korek Telecom, to focus on core operations after expanding rapidly in the past few years.
He added that Agility has approximately $1.7 billion of debt and $1.3 billion in cash - leaving around $400 million in net debt.
"We're very much focused on our core business and ensuring we have a strong liquidity position. We hope to bring the net debt level to zero by the end of 2009," Sultan said in Davos ahead of the annual meeting of the World Economic Forum.
"You want to have as good a cash position as possible. Access to capital is pretty much constrained. Many banks are not lending ... It's the question of willingness of banks to lend and that doesn't exist."
Sultan also confirmed Agility is close to meeting its 2008 revenue target of $7 billion, noting that the firm expected 2009 revenues to be higher than that of last year's.
Agility has spent billions of dollars on acquisitions in the past few years, buying a string of logistics companies in Asia and other emerging markets to reduce its dependence on U.S. government deals to feed troops in Iraq and Afghanistan.
Sultan said that pace of expansion could slow as it focuses on digesting the past purchases.
"There may be divestiture of non-core assets ... Going forward, if we are going to do (acquisitions), we will be focusing on larger opportunities," he said.
He also said he plans to scale down the firm's private equity and real estate investment operations and exit from Iraqi-Kurdish operator Korek Telecom.
"Business prospects for private equity were completely based on access to financing," Sultan said.
"It's not a viable business model. Exiting some of our investments would be good for our shareholders." (Reuters)