'An approach has been made to buy us out at about 25 per cent of the book value of the debt,' says one of the syndicated lenders to BIB. 'At this price the offer is not particularly attractive, but it could resurface and the avenue is one that will be examined.'

It is understood that the offer was tabled by Egypt-based Gulf Arab Investment Company (GAIC). Significantly, the chairman of GAIC, Sami Kaiksow, is also vice-chairman of BIB.

Although the GAIC offer is based on a steep discount, most of the syndicated lenders will have already written off between 50-75 per cent of their exposures, banks close to the transaction say.

'Basically, we have three options: a third party buys BIB; it is put into administration; or it goes into voluntary liquidation,' says one of the creditors. 'What has become clear is that there is not going to be a restructuring. What is also clear is that this can't be delayed for much longer. Some of the banks are getting close to pulling the trigger - we are entering the end game.'

At the point of default last year, BIB had three outstanding medium-term syndicated loans totalling $227.5 million, and an additional $230 million in short-term liabilities. Steering groups have been formed to represent the two types of creditors. Representatives from Arab Bank, Arab Banking Corporation,ANZ Investment Bank, DZ Bank, Emirates Bank International, JP Morgan Chase & Companyand Lloyds TSBwill act on behalf of medium-term syndicated lenders, while representatives from HSBC, JP Morgan Chase & Company, BankMuscat, National Bank of Dubai, the Pension Fund Commission of Bahrain and Bahrain Telecommunications Company (Batelco)will represent the interests of short-term creditors (MEED 29:11:02).

'There is an ongoing debate over whether the BMA [Bahrain Monetary Agency - central bank] or the Ministry of Commerce have jurisdiction and this will have a major impact on whether the medium-term lenders are paid after the depositors - at which point there won't be much left in the pot - or at the same time,' says one of the short-term creditors. 'At the moment it looks like the BMA's regulations will apply, which is not good for the syndicated lenders.'