Al Gosaibi group said to owe $9.2b

Dubai: Ahmad Hamad Al Gosaibi & Brothers Co, the Saudi family holding company whose Bahraini bank has defaulted, owes 34.6 billion Saudi riyals ($9.2 billion) to more than 100 banks, two sources said.

The Al Gosaibi group held a meeting with creditors in Bahrain on June 24 to ask for a grace period of 90 days to investigate the debt, said one person involved in the talks, who declined to be identified because the information is confidential. A spokesman for the company, which bottles Pepsi Cola in Saudi Arabia and holds stakes in lenders including Saudi British Bank, had no immediate comment when contacted by Bloomberg News. The size of Al Gosaibi's liabilities "strikes the markets as a surprise," said Luis Costa, an emerging-markets debt strategist at Commerzbank AG in London.

Al Gosaibi said on June 11 it had discovered "substantial irregularities" within its financial services arm after The International Banking Corporation (TIBC) BSC in Bahrain defaulted on debt. An Al Gosaibi spokesman said last month that Maan Al Sanea, the Saudi billionaire who owns a stake in HSBC Holdings Plc, managed TIBC. A spokesman for Saad Group, Al Sanea's holding company, denied he had a management role.

The Saudi Arabian Monetary Agency on May 28 froze the accounts of Al Sanea, according to a person who read the central bank's circular. Five days later, Saad Group, which is based in Al Khobar in Saudi Arabia's Eastern province, said it was restructuring debt because of "a short-term liquidity squeeze". Moody's downgraded Saad by five levels to below investment grade before withdrawing the rating because of a lack of "adequate" information about the company's finances.

Al Sanea, who married into the Al Gosaibi family, ranked No. 62 among the world's richest people by Forbes in March, with an estimated net worth of $7 billion. Al Gosaibi is setting up steering groups for each of its four financial divisions to figure out how to repay debt.Banks that provided at least $64 billion to Saudi borrowers in the past five years as record oil prices spurred economic growth for the world's biggest crude exporter now risk losses.

International banks hold 30 per cent of the debt of Al Gosaibi's four financial divisions, TIBC, Saudi Arabia-based Money Exchange, Bermuda-based Al Gosaibi Trading Services, and Bahrain-based Al Gosaibi Investment Holding, according to the two people, who are involved in the talks to restructure the debt.