AH al-Gosaibi to offer improved settlement to creditors

21 April 2015

Creditor meeting to be scheduled in coming weeks

  • Settlement relates to debts dating back to 2009
  • AH al-Gosaibi pursuing recoveries of assets from Al-Sanea and his associates
  • Previous debt settlement presented to creditors in May 2014

The Saudi Arabian family-owned company Ahmad Hamad al-Gosaibi & Brothers (AH al-Gosaibi) will present improved settlement terms to creditors on approximately SR22bn-24bn ($5.9bn-$6.4bn) of debt in the coming weeks.

The company has agreed to a new set of terms with its steering committee, which comprises five financial institutions and is now preparing to outline its revised proposal to a wider claimant group.

The latest agreement builds and improves upon a resettlement proposal that was presented to creditors in a closed-door meeting in Dubai last May.

It aims to end the on-going stalemate between AH al-Gosaibi and the banks, which date back to 2009 when the group first defaulted on its debts.

The claims asserted by the banks and financial institutions refer to liabilities related to a dispute with Saad Group, headed by Maan al-Sanea who is related to the Al-Gosaibi family by marriage.

Al-Sanea has always rejected claims of alleged wrongdoing.

The terms of the previous agreement included an upfront, “good faith” payment of 10 per cent of creditors’ claims; a guarantee of a minimum return of 20 cents on the dollar over a fixed time period, secured by a real estate portfolio; and a potential return of 40-60 cents on the dollar if AH al-Gosaibi can successfully recover funds.

These recoveries would be a result of civil lawsuits against Al-Sanea and entities controlled by him in the Cayman Islands and Saudi Arabia, as well as claims against two local lenders – Sabb and Samba – for the value of two share portfolios once owned by the group and seized by banks in a move AH al-Gosaibi says breaks Saudi Arabia’s laws.

All claimants will be invited to the planned meeting.

A total of 90 out of 109 identified claimants, representing approximately 60 per cent of overall debt, are formally involved in the settlement process, or have informed AH al-Gosaibi to say they will participate.

A final settlement agreement must be approved by the Saudi Arabian authorities.

The success of the proposed deal rests on the involvement of banks in Saudi Arabia that hold about a third of the debt. The local institutions refused to attend last year’s Dubai meeting, instead planning to pursue their own independent attempts to recover assets.

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