Algosaibi Family Looks to Rebuild After $7.5 Billion Debt Deal
(Bloomberg) -- The Algosaibi family is keeping most of their company’s operating businesses as part of a deal with creditors and will eventually look to restore them by going back to the credit market, according to Simon Charlton, the Saudi conglomerate’s chief restructuring officer.
“Clearly we need to go through the restructuring, there are various steps we need to undertake to meet our obligations under the agreement,” Charlton said in an interview Sunday with Bloomberg Television.
“But we are looking where it would make the most sense and at what sort of level to return to the market in the hope that that will bolster the businesses and allow them to become more involved and return to their former glory,” he said.
Ahmad Hamad Algosaibi & Brothers Co., which has been locked in legal battles and negotiations with creditors over $7.5 billion of debt since 2009, had its proposal to restructure the obligations ratified by a Saudi court -- in the first major test for the kingdom’s new bankruptcy law,
The order from the commercial court in Dammam, in Saudi Arabia’s Eastern Province, will allow various asset freezes to be lifted and let AHAB, as the company is known, go ahead with a plan to repay creditors about 26% of their claim values through a mixture of cash, shares and Saudi real estate.
The company was also locked in a legal dispute with Saad Group, which is owned by Maan Al-Sanea and similarly defaulted on billions of dollars in 2009 as the global economic crisis froze credit markets and asset prices slumped. Saad Group is also going through the bankruptcy process in Saudi Arabia and is “probably” two or three years behind AHAB, according to Charlton, who said he isn’t directly involved with that process.
BNP Paribas SA and Citigroup Inc. were among global banks with the most exposure to AHAB. Since its default, many banks have sold off their exposure to the company to hedge funds.
Charlton also said:
- Reshaped AHAB will contain most of the operating manufacturing businesses, such as shipping, logistics, hospitality, retail
- “Our hope is that as the company emerges from this and gets access to credit and is back into the credit markets and will be able to raise working capital finance, we’ll be able to rebuild those businesses”
- The “primary” assets that are being contributed to settlement are the most liquid holdings such as large positions in public equities and a large portfolio of real estate
- The most important outcome for investors longer term is knowing “there are mechanisms in place that will allow you to have an orderly exit if things don’t work out”
- Among creditors, all Saudi banks but one participated in the most recent vote
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