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UPDATE 1-Saudi's Algosaibi outlines debt proposal to creditors
May 7, 2014 / 4:01 PM / 4 years ago

UPDATE 1-Saudi's Algosaibi outlines debt proposal to creditors

(Adds detail, context)

DUBAI, May 7 (Reuters) - Saudi Arabia’s Ahmad Hamad Algosaibi and Brothers (AHAB) has proposed a debt restructuring plan that would involve creditors being repaid a minimum of 20 cents on every dollar owed, as it attempts to restart long-stalled talks on a settlement.

The family conglomerate collapsed in 2009 along with Saad Group, a separate Saudi business empire led by Maan al-Sanea, since when the two have been battling over who was to blame for the issues which affected their respective conglomerates.

AHAB said in a statement on Wednesday, issued following a meeting with creditors in Dubai, that it had direct liabilities to banks and financial institutions worth around $6 billion.

The company said it was excluding claims to units such as The International Banking Corp (TIBC), a Bahrain-based subsidiary whose failure in 2009 revealed the problems at the wider group.

In a separate development, AHAB was named as defendant in a $1.9 billion lawsuit brought by law firm Trowers & Hamlins as administrator for TIBC, acting on behalf of the Central Bank of Bahrain, a statement from Trowers & Hamlins said.

Under AHAB’s proposal, it would pay 10 percent of claims upfront, to show good faith, according to the statement. It would then return a further 10 percent after five years, paid for by a pool of real-estate assets which AHAB would set aside as security, a copy of a presentation to creditors, and distributed to Reuters by AHAB, said.

AHAB did not specify what real estate would make up the collateral. The presentation said AHAB has a real estate portfolio valued at 3.44 billion riyals ($917.2 million).

SUCCESS NOT GUARANTEED

AHAB said it was aiming to return between 40 and 60 percent of total claims to creditors, depending on potential recoveries from legal cases including in the Cayman Islands and Saudi Arabia against Sanea and companies controlled by him, as well as lawsuits against two Saudi banks.

Cases in Saudi against Sanea and his entities include claims that Sanea benefited from unauthorised cheques and electronic transfers, in which AHAB is seeking a combined 12.98 billion riyals. It is also petitioning for the return of shares in lender Samba Financial Group, held by Sanea, which have a value of 2.8 billion riyals, the presentation said.

In the Caymans, AHAB is seeking claims from Saad Group entities worth around 3.375 billion riyals, the document added.

Sanea and his lawyers have consistently rejected these claims. No-one at Saad Group could immediately be reached for comment.

The claims against Samba and Saudi British Bank (SABB) were brought by AHAB after the banks seized share portfolios to settle alleged debts. AHAB is seeking 1.8 billion riyals and 1.2 billion respectively from the banks and expects a resolution to the cases in between one and three years’ time, the presentation said.

Samba couldn’t immediately be reached for comment, while SABB declined to comment.

AHAB is also being pursued in the courts by Trowers & Hamlins. In the law firm’s statement, it said it had filed a new suit at the Bahrain Chamber of Dispute Resolution, as part of a wider effort to reclaim assets from AHAB on behalf of TIBC’s international and regional bank creditors who are owed $2.6 billion.

The law firm said the suit was “in relation to the deliberate misappropriation of funds raised through the creation of a fraudulent loan book which was at the heart of TIBC’s operations.” This loan book was then used by AHAB to trade for its own account, the law firm alleges.

AHAB owes TIBC $3.2 billion, Abdullah Mutawi, the partner at Trowers & Hamlins, was quoted as saying in the statement.

AHAB didn’t immediately response to a request for comment.

AHAB said in its presentation document that “success cannot be guaranteed, however even low-end recovery estimates realise significant benefit for the creditors.”

In signing up to the restructuring proposal, creditors would have to stop all legal actions against AHAB, the presentation said. Once AHAB had repaid 50 percent of the cash, any money recovered by the conglomerate would be split, with half going to the main Algosaibi family and the rest to pay creditor debt. ($1 = 3.7505 Saudi Riyals) (Editing by Louise Heavens and David Holmes)

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