Al Gosaibi & Brothers sets up steering committee for debt restructuring

The beleaguered Saudi conglomerate Ahmad Hamad Al Gosaibi & Brothers (Ahab) has announced the establishment of a steering committee for the negotiation of its $5.9bn debt restructuring.

The committee, announced by Ahab on Tuesday, consists of representatives of five institutions, including players from the GCC and beyond, “to facilitate discussions and negotiations … relating to the settlement process”.

The establishment of a steering committee is regarded as a significant step by Ahab because a previous attempt to deal with creditors collapsed when a consensus failed to emerge after a 2010 meeting in Dubai.

Although Ahab declined to identify the members of the steering committee, a person familiar with the situation, who asked not to be named, said that it included Emirates NBD, Standard Chartered, Arab Banking Corporation of Bahrain and the French group BNP and the US hedge fund Fortress Investment. There were no Saudi banks, which are big Ahab creditors, represented on the committee, the person said.

Ahab’s acting chief executive, Simon Charlton, said: “We are determined to make this settlement process work, and the formal establishment of the steering committee is a key step in advancing the negotiations with these institutions.

“We have been working with them and we can now begin the discussions that we hope will lead to agreed settlement terms.”

Ahab, which collapsed in 2009 in a dispute with Maan Al Sanea, a Saudi financier who is related to the Al Gosaibis by marriage, has been in talks with creditors ever since amid a raft of global law suits accusing Mr Al Sanea of fraud, forgery and theft by Mr Al Sanea. He has consistently denied the allegations and fought court actions against Ahab on three continents.

In May, Ahab made an attempt to settle with creditors, again in Dubai, with the offer of 20 cents for each dollar of debt, plus the proceeds of any successful litigation against Mr Al Sanea, which could possibly have increased the total payout to 50 cents on the dollar. Mr Al Sanea is certain to fight those claims, people close to him say.

The family, once one of Saudi Arabia’s best regarded business dynasties with interests ranging from property to drinks bottling, has made it clear that it does not have the assets to meet creditors’ claims in full.

Houlihan Lokey, a specialist advisory firm from the United States, and the international legal firm Allen & Overy have been appointed by the steering committee to serve as financial and legal advisers to the settlement process, Ahab said.

Ahab said in its statement that 87 of 108 identified claimants, representing approximately 59 per cent of the overall debt are now formally engaged in the process or have expressed an interest to do so.

The attempt to settle with creditors has been complicated by the stance taken by Saudi creditors, who represent about one third of the total amount of debt. Several of the kingdom’s biggest banks, including Al Rahji Bank, Saudi Investment Bank and National Commercial Bank, have taken separate legal action against Ahab in Saudi Arabia.

Courts in the kingdom have mainly granted their claims against Ahab assets, and are currently seeking enforcement of those rulings.

A court in Al Khobar, Saudi Arabia, where Ahab has its headquarters, is due to rule soon on whether the Saudi banks can execute the judgements from other courts in their favour. If the judge allows them to take possession of Ahab assets, it is likely to bankrupt the business, leaving nothing for the international and regional banks also owed billions of dollars.

There is also a separate action against Ahab in Bahrain, taken by the administrators Trowers & Hamlins in Bahrain over the collapse there of an Ahab-owned bank. Ahab is disputing this claim, which forms no part of the steering committee’s deliberations.

None of the bank creditors would comment on the establishment of the steering committee.

Follow The National's Business section on Twitter