Dubai: Ahmad Hamad Algosaibi & Brothers Co. agreed with its main creditors on a new proposal to restructure $5.9 billion of debt as it seeks to recover from the Middle East’s largest default.
The Saudi Arabian company agreed to improved settlement terms with the steering committee of lenders, which represents about ninety banks and will present terms to remaining creditors at a meeting within weeks, the company said in an emailed statement today, without giving any details on the revised proposal.
Algosaibi and billionaire Maan Al Sanea’s Saad Group defaulted on at least $15.7 billion in 2009 as the global economic crisis froze credit markets and asset prices slumped. The two family holding companies, related by marital ties, have been locked in legal disputes ever since. Algosaibi in May proposed to pay banks an initial 10 cents on the dollar and pledged its real estate assets to guarantee payment of an additional 10 cents over five years.
“We have moved our position significantly and, without question, this deal represents the best option for financial institutions seeking recoveries,” Simon Charlton, Algosaibi’s acting chief executive officer and chief restructuring officer, said in the statement. “Upon receiving support from the wider claimant group, we will seek ratification of the settlement in the kingdom.”
Settlement process
A total of 90 banks out of 109 identified claimants, representing 60 per cent of the company’s total debt, are formally involved in the settlement process or have written to Algosaibi to say they will participate, the company said in the statement. The steering committee is made up of Standard Chartered Plc, Emirates NBD PJSC, BNP Paribas SA, Arab Banking Corp. and Fortress Investment Group LLC.
Units of Algosaibi and Saad borrowed from lenders to finance investment and expansion into real estate. One-third of the debt is owed to Saudi Arabian banks, including Al Rajhi Bank and Saudi Investment Bank, another third to Middle Eastern lenders and the remainder was borrowed from global banks.
Lenders filed about 22 billion riyals ($5.9 billion) of claims for unpaid loans in countries including the US, UK and Saudi Arabia, according to estimates by Algosaibi, which operates in industries from construction to finance.
Saudi Arabian banks are so far refusing to be involved in the talks. Some banks in the kingdom have seized Algosaibi assets, while others are taking legal action as they seek to recover debt.
A final settlement agreement must be approved be Saudi Arabian authorities and must treat all creditors equally, regardless of their nationality, Algosaibi said on Tuesday.
