End to Saudi Algosaibi debt saga inches closer
DUBAI, January 29, 2016
One of the Middle East's longest-running debt disputes edged closer to being resolved on Thursday when Saudi Arabian family conglomerate Ahmad Hamad Algosaibi and Brothers (AHAB) presented a revised restructuring plan.
AHAB has around SR22.5 billion ($6 billion) of claims against it after the hospitality, food and real estate group collapsed in 2009 along with Saad Group, a separate Saudi business empire led by Maan Al-Sanea.
Since then, the two groups have conducted a high-profile battle in the courts over who was to blame.
At a meeting in Dubai, AHAB asked its creditors to pledge to sign up to the final terms of the restructuring, with the proposal becoming binding once 50 per cent of them by value agree, a source present at the talks told Reuters.
AHAB expects this to happen by the start of May, a document seen by Reuters revealed.
The debt proposal has been revised since an earlier version in June. The source said plans for AHAB's real estate assets had been changed to incentivise it to sell within two years.
"The steering committee and its advisers have negotiated hard and made significant improvements to the structure, bringing cash forward, so this is a better deal than June," said a member of the steering committee, which supports the deal.
The five-member group of creditors chosen to negotiate on behalf of all claimants is Bank ABC, BNP Paribas, Emirates NBD, Fortress Investment Group and Standard Chartered.
AHAB also asked creditors to submit formal claims which could be presented by the end of March to a judge at an enforcement court in the city of Khobar, where the family is from.
This would clarify what claims AHAB has against it, as debt has been sold to hedge funds and other parties since 2009 and some creditors have only provided rough numbers against their claims, Simon Charlton, AHAB's acting chief executive, said.
By agreeing claims now, the company and these claimants can go to the judge in Khobar together, with AHAB targeting a majority of creditors by value which would give weight to their case, he added.
Bringing a majority of creditors together in one group and securing a judge's assent would also put these international creditors on a par with Saudi banks, which have so far refused to negotiate with AHAB and are trying to enforce separate court judgements against the company, Charlton said.
The court process, if agreed to by a judge, would pave the way for AHAB to apply for the lifting of an asset freeze imposed on it by the Saudi Royal Court, this could then allow assets to be liquidated under the terms of the debt restructuring. - Reuters
