Kuwait's Agility shares slump on U.S. charges

* New contracts barred as U.S. charges pend

* Agility says charges "without merit"

* Stock down over 8 pct

By Eman Goma

KUWAIT, Nov 17 - Agility <AGLT.KW>, a Kuwaiti logistics firm that ships supplies to the U.S. Army in Iraq and Kuwait, said on Tuesday a U.S. indictment for allegedly overcharging would bar it from new contracts, sending its shares sharply lower.

On Monday, a grand jury indicted Agility under its previous name, Public Warehousing Company, K.S.C. , on charges of fraud and conspiracy alleging that it overcharged the U.S. Army on $8.5 billion worth of food supply contracts. [ID:nN16518906]

Agility, the principle food supplier to the U.S. military in Kuwait and Iraq, said in a statement that the indictment and complaint were without merit and they would not impair existing contracts with the U.S. government.

"PWC has been debarred from future contract awards until such time as a determination has been made about the company's current responsibility as a contractor," Agility said. "These allegations should have no impact on any current contracts with the U.S. government."

Shares in the firm tumbled over 8 percent as investors unloaded the stock on the unexpected news.

"The company's managing director a couple of days ago said that all the contracts with the U.S. government are ok," said Talal al-Loghani, vice-president for Gulf equity markets at Kuwait Finance and Investment Co. "The company didn't give an indication."

Agility receives 37 percent of its revenue by providing logistics support to the U.S. government and other agencies, according to a recent Goldman Sachs report.

Agility competes with regional firm Aramex <ARMX.DU>, but global players such as DHL <DPWGn.DE>, UPS <UPS.N>, FedEx <FDX.N> and TNT <TNT.AS> are increasing competition.

The Middle East is a large market for freight and logistics due to its strategic location, quickly growing economies and massive shipping infrastructure. The grand jury in Atlanta indicted the firm on multiple charges of fraud and conspiracy in connection with contracts issued by the U.S. Department of Defense between 2003 and 2005.

Overcharging amounted to $60 million over a 41-month period, according to the U.S. Attorney's office in Atlanta.

If convicted of violations of the False Claims Act, PWC faces probation and a fine of up to twice the gain it realized or twice the loss to the United States.

Agility, which operates in 120 countries, has been trying to reduce its dependence on U.S. government deals to supply troops in Iraq and Afghanistan by moving to new markets and making a string of buys.

It now also makes money from real estate and, in July, signed a deal to provide freight services for a gold mine in Papua New Guinea.

The lawsuit followed an initial whistle-blower suit filed by Kamal Mustafa Al-Sultan, the owner of a company that partnered with PWC to submit a proposal for the contracts, according to a Justice Department spokesman. (Additional reporting by Thomas Atkins, Nicolas Parasie, and Amran Abocar; editing by Will Waterman and Simon Jessop)