Algosaibi assures banks minimum 20pc recovery
Dubai, May 7, 2014
Saudi Arabian family conglomerate Ahmad Hamad Algosaibi & Brothers (AHAB) today outlined a comprehensive settlement proposal to a group of banks and other financial institutions with claims against it that would see them repaid a minimum of 20 cents on every dollar owed.
The claims asserted by banks, totaling billions of dollars, arise out of liabilities incurred through a massive fraud in the money exchange division of AHAB, said a statement.
The fraud left AHAB facing around $6 billion in direct liabilities to banks and other financial institutions. These liabilities have spawned more than 70 lawsuits in at least 10 countries over the past five years, it said.
"The proposal we outlined today is a serious and genuine offer to maximise the recoveries for AHAB's creditors and end a five-year battle and the resulting stalemate in which we find ourselves today," said Simon Charlton, AHAB's acting CEO. "The only alternative to this process is long, costly, uncertain, and in no one's best interest."
Charlton outlined a proposal in which AHAB would make an upfront payment equal to approximately 10 percent of creditors' claims as a sign of good faith and its commitment to the process.
Additionally, the proposal includes recoveries from third parties, with the goal of a total recovery for creditors of 40-60 percent of claimed amounts. These recoveries would come from AHAB's civil lawsuits in various countries against Maan Al Sanea, and claims against two banks - SABB and Samba - for the the value of two substantial share portfolios once owned by AHAB and seized unilaterally by the banks in a move AHAB asserts violated legal orders and the laws of Saudi Arabia, said the statement.
AHAB will guarantee a minimum recovery of 20 cents on the dollar, secured by the company's extensive real estate portfolio, it asserted.
Charlton described that the most likely alternative to a consensual settlement with AHAB would consist of banks competing with each other to obtain individual enforcement orders in Saudi Arabia - proceedings that will incur massive legal costs, years of litigation, and significant uncertainty. The process would be further complicated due to the Royal Order that prohibits any sale or transfer of AHAB assets for the protection of all creditors. AHAB's proposal creates a framework for a settlement whereby AHAB and its creditors would jointly approach the Royal Court to receive equal treatment in compliance with Sharia law.
The meeting also featured AHAB CFO, Ben Jones, who presented a realistic picture of AHAB's financial condition. He described a company in severe distress following the discovery of the fraud.
The company has lost all of its businesses outside Saudi Arabia, has no access to credit markets, and faces wary counterparties that are uncertain of AHAB's future.
Jones explained that AHAB has taken serious steps to restructure its business, including hiring a team of professional senior executives, working to drastically reorganise the business and cut costs. He and Charlton emphasised the Algosaibi family's strong desire for a global resolution after five years of expensive litigation and turmoil.
In addition to the AHAB presentation, the all-day meeting included a question and answer session and a banks-only discussion in order organise future negotiations with AHAB. - TradeArabia News Service