DUBAI (Reuters) - First Abu Dhabi Bank (FAB) FAB.AD has started an auction process for a Dubai hotel operated by Shangri-La and owned by indebted construction group Al Jaber with a starting price of 700 million dirhams ($190.59 million), two sources said.
Al Jaber, best known as a contractor but with interests across a range of sectors, has struggled since a construction downturn in the United Arab Emirates after the global financial crisis.
The auction by First Abu Dhabi Bank, which is the main lender for the Shangri-La hotel, marks a first step by creditors to recover funds after delays to a restructuring agreement for 5.9 billion dirhams of debt last year, one of the sources said.
Al Jaber declined to comment when contacted by Reuters on Thursday and FAB was not immediately available for comment.
Other creditors will receive distributions from the sale after FAB receives its dues, the sources said.
Creditors – which include hedge funds and Abu Dhabi lender Abu Dhabi Commercial Bank ADCB.AD – have started an enforcement process against the group's shareholders for a loan Al Jaber's chairman owes to the business, and which creditors have security over, the sources said.
ADCB did not immediately respond to a request for comment.One of the sources said the enforcement is expected to formally begin shortly, after two thirds of all the lenders voted for it.
Al Jaber began talks with creditors in 2011 after building up debt to expand beyond construction work.
As part of the restructuring agreement, Al Jaber was expected to appoint a new board, sell operating companies, some of its investment portfolio and assets such as the Shangri-La hotels in Dubai and Abu Dhabi.
In exchange for this, creditors had agreed to extend the maturity of Al Jaber’s 5.9 billion dirhams loan, cut interest rates, and provide additional revolving debt.
($1 = 3.6728 UAE dirham)
Editing by Jane Merriman
Our Standards: The Thomson Reuters Trust Principles.