Arcapita to wind down under restructuring plan

13 February 2013

Bahrain investment firm proposes liquidation plan to settle debts

Bahrain-based investment firm Arcapita has proposed a restructuring plan that envisages the sale of all of its assets and the “management and orderly wind-down” of the company.

The proposal was put to a court in the US on 8 February as part of Arcapita’s Chapter 11 bankruptcy proceedings. Under the terms of the plan, which still needs to be approved by creditors, Arcapita will “wind down its operations and not seek any new investors or investments”.

Instead, the focus will be the orderly sale of assets valued at $7bn last year, with proceeds directed to paying off outstanding debts. Lenders to the company will be issued with equity in two new companies that will hold the assets of Arcapita and its related companies. A $550m sukuk (Islamic bond) will be issued as part of the repayment plan for unsecured creditors.

According to the filings, Arcapita’s decision to liquidate its assets and wind-down its operations followed the failure to arrange a new $250m capital injection by the start of November 2012 that would have provided funding for the company to carry on.

Arcapita is being advised by the UK’s Rothschild, Gibson Dunn & Crutcher and Alvarez & Marsal on the restructuring plan.

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