Arcapita 'planning to liquidate assets'
Manama, February 11, 2013
Bahrain-based Arcapita Bank is planning to liquidate its assets and will not seek new investors or investments, said a report.
The bank "will wind down its operations and will not seek out new investors or investments," reported the Gulf Daily News, our sister newspaper, citing a disclosure statement on the reorganisation plan.
Arcapita intends to make distributions to creditors when it exits investments, "which will occur in a manner, and at a time, that maximises returns," it said.
Members of Arcapita's management are to be retained to oversee the portfolio, "ensuring that the wind-down of debtors' assets occurs successfully and without interruption", said the plan.
The reorganisation plan will be submitted to creditors for a vote and to the US court for confirmation, the bank said.
The plan will be heard within 45 days and must then be approved by creditors, it added.
Creditors are to be given equity in two new companies that hold all the assets of Arcapita and several related companies, the disclosure statement said.
The proposal also envisions a new $550 million Islamic bond, or sukuk, to be issued to the unsecured creditors.
The sukuk would come with a 12 per cent annual profit rate. It would be unsecured and perpetual, meaning it wouldn't have a fixed redemption date, according to its proposed terms.
Arcapita, the first Gulf company to file for bankruptcy in the US under Chapter 11 rules, said the plan "represents the most effective way to implement a comprehensive restructuring ... and maximise recoveries to creditors and other stakeholders".
The company's portfolio of investments includes Bahrain Bay Development and Riffa Views in the kingdom, according to information available on the company's website.
Arcapita Bank yesterday declined to comment further on the reorganisation plan.
The investment firm filed for bankruptcy in New York in March and was given court approval in November to take out a $125m Sharia-compliant loan to provide funding while it restructured its debts.
The economic downturn and the crisis in the euro zone took a huge toll on Arcapita, which faced difficulty in raising finance and disposing of investments.
"During the exclusivity period provided by Chapter 11, we worked tirelessly with our advisers, our key creditors, including members of the Official Committee of Unsecured Creditors and of an ad hoc group of creditors, and their advisers to submit a plan of reorganisation that maximises recoveries from Arcapita's assets," Arcapita chief executive Atif A Abdulmalik said in the Saturday's filing.
"Based on extensive feedback from these creditors, the creditor distributions implemented by the plan broadly reflect the economic splits agreed between the creditors.
"We are committed to confirming the plan and exiting Chapter 11 as quickly as possible," he said.
Arcapita's advisers are Gibson Dunn & Crutcher, Rothschild and Alvarez & Marsal.-TradeArabia News Service