Saudi Group Seeks to Stop Banks Claiming Assets After Default

(Bloomberg) -- Ahmad Hamad Algosaibi & Brothers Co. will seek to prevent Arab National Bank and another lender from claiming assets of the Saudi Arabian company to settle outstanding loans, according to its acting chief executive officer.

Algosaibi will oppose the move because the assets are meant to be frozen by a royal decree to ensure all creditors are treated fairly, Simon Charlton said in an interview in Dubai, without naming the second bank. The dispute over the portfolio of publicly-traded Saudi equities and accumulated dividends is now before a Saudi court appointed to oversee claims against the company, he said.

Algosaibi and billionaire Maan al-Sanea’s Saad Group, two Saudi family holding companies, defaulted on about $15 billion of loans in 2009 as the global economic crisis froze credit markets and asset prices slumped. The companies and banks are now in talks over how to resolve what was the Middle East’s largest-ever default.

“Banks who have claims against Ahmad Hamad Algosaibi & Brothers Co. have gone to court and most of them have obtained judgments,” Robert Eid, Arab National Bank’s CEO said in an emailed response to questions. “Enforcement of judgments can only take place through the judicial system.”

ANB “has spearheaded efforts to form a lenders’ group, with the objective of reaching an out-of-court settlement” with “little success,” Eid said. “Banks remain though open to discuss any fair and equitable settlement agreement.”

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Algosaibi will also dispute a decision by the Capital Market Authority to allow Samba Financial Group and Saudi British Bank to take about 3 billion riyals ($800 million) of shares from portfolio accounts owned by AHAB, Charlton said.

“You can’t be taking away these assets and still claim 100 percent of your debt in the restructuring process,” Charlton said. “And these assets were frozen by royal order to protect the interests of all creditors, not a select few.”

To contact the reporters on this story: Arif Sharif in Dubai at asharif2@bloomberg.net;Sarah Algethami in Riyadh at salgethami@bloomberg.net

To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Andrew Blackman, Jon Menon

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