Al-Gosaibi signs debt deal

25 July 2016

Cayman Islands trial ongoing

Saudi Arabia’s Ahmad Hamad al-Gosaibi & Brothers (Ahab) has signed a debt settlement deal with its steering committee.

The detailed settlement offer, presented to claimants on 28 January 2016, aims to resolve Ahab’s $15.7bn debt default.

The five member steering committee, made up of key bank creditors, signed the settlement support agreement. This commits them to supporting the implementation of the agreed settlement terms.

Other claimants now need to sign the settlement support agreement. Ahab has agreed the amount of claims and enforceability with 89.9 per cent of claimants, representing 56.3 per cent of the value of their debts.

A three-judge Joint Directorate of Enforcement at the General Court (JDEK) in Al-Khobar, where Ahab is based, was recently appointed. It is authorised to address claims against Ahab.

JDEK invited claimants to submit claims by 21 July, and Ahab has requested a deadline extension.

Ahab and the claimants will then request JDEK to administer the settlement.

Ahab claimed the settlement was in the best interests of all stakeholders in a press release. It argued that the settlement was fair in maximising returns to claimants, protecting employees and reducing costs, while protecting Saudi Arabia’s international reputation.

“By signing the settlement support agreement with Ahab, the five financial institutions that comprise the claimant steering committee have committed themselves to support the deal on the agreed terms,” said Stephen Jenkins, a representative of Manama-based Arab Banking Corporation on the committee, in a press release. “The steering committee remain of the view that this is the best solution to reach a comprehensive agreement that maximizes recoveries for all claimants. We now look to the full claimant group to do the same.”

Some Saudi banks were pursuing a separate action against Ahab.

The settlement includes a commitment to distribute the proceeds of a $7.3bn lawsuit underway in the Grand Court of the Cayman Islands.

Ahab alleges 17 offshore companies benefitted from a multi-billion dollar fraud instigated by their business partner Maan al-Sanea, owner of the Saad Group. They are now in liquidation, and Ahab aims to maximise recoveries for claimants, offering up to $0.50 on the dollar if the court case is successful.

Al-Sanea has denied any wrongdoing, and one of the liquidators, Grant Thornton, has brought a counter-claim.

Ahab and the Saad Group defaulted on at least $15.7bn of debt in 2009 leaving more than 113 financial institutions across the Gulf, Europe and US exposed.

It is one of the biggest corporate defaults in the Middle East to date, and the source of multiple court cases in Saudi Arabia and globally.

Creditors rejected a 2009 debt settlement deal from AHAB. The process was revived in May 2014, with a new settlement offer.

AHAB secured a $2.5bn judgement against al-Sanea in 2012 which it is seeking to enforce. It is now suing for a further $7.3bn while a group of liquidators for the Saad Group is countersuing for $6bn.

The case is being presided over by Chief Justice Anthony Smellie, who ruled in favour of AHAB in 2012.

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