November 24, 2019 / 9:53 AM / 16 days ago

Creditors of UAE's Al Jaber consider enforcing debt claims: sources

DUBAI (Reuters) - Creditors of Abu Dhabi-based Al Jaber Group are considering enforcing claims against the owners of the group after delays in executing a restructuring agreement, the latest in a long-running debt dispute, two sources familiar with the matter 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 group agreed late last year restructuring terms for 5.9 billion dirhams ($1.6 billion) of debt, in a deal that would have seen the company reduce its obligations through asset sales and a debt buyback mechanism with a 52% discount.

But delays in implementing some aspects of the deal have frustrated a majority of creditors – including hedge funds and Abu Dhabi lenders Abu Dhabi Commercial Bank (ADCB.AD) and First Abu Dhabi Bank (FAB.AD) – who are planning to take action against the group owners, the sources said.

“Lenders have reached the finish line,” one of them said.

A spokesman for Al Jaber said the company signed earlier this year the terms of an agreement with its lenders, but not all of its creditors approved it.

“Since then, the group has continued to pursue its core objective of reaching a similarly structured agreement at the earliest opportunity and has been encouraging all lenders to participate in productive dialogue toward this end.”

First Abu Dhabi Bank and Abu Dhabi Commercial banks declined to comment.

The company began talks with creditors in 2011 after building up debt to expand beyond construction work.

As part of the latest agreement, it was expected to appoint a new board, sell operating companies, some of its investment portfolio, and shareholder assets such as the Shangri-La hotels in Dubai and Abu Dhabi.

In exchange for this, creditors – who are advised by PwC – agreed to extend the maturity of Al Jaber’s 5.9 billion dirhams loan, cut interest rates, and provide additional revolving debt.

But while the company has fulfilled some aspects of the agreement, it has so far not sold assets, despite receiving interest from potential buyers, said one of the sources.

The potential enforcement by creditors would be on a “related party balance” of 4.5 billion dirhams that the company’s chairman owes to the business, and which creditors have security over, the same source said.

Before its latest restructuring agreement, Al Jaber had reached a debt restructuring deal in June 2014, but it missed debt repayments in the following years.

Several companies in the UAE have sought to extend their debt maturities or agree better terms over the past few years to avoid defaults, after a collapse in oil prices hit firms’ revenues, particularly in sectors such as construction and energy services.

Additional reporting by Stanley Carvalho; Editing by Mark Potter

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