Al Gosaibi pushing for solution on Dh22.52 billion debt

About 40 regional and international banks, and other creditors, will hear proposals from Al Gosaibi executives to settle the long-running dispute, which has sparked legal actions across three continents.
Maan Al Sanea, a financier and businessman who had married into the Al Gosaibi family, has been in a long and bitter dispute with the Saudi conglomerate. Mido Ahmed / AFP
Maan Al Sanea, a financier and businessman who had married into the Al Gosaibi family, has been in a long and bitter dispute with the Saudi conglomerate. Mido Ahmed / AFP

Saudi Arabia’s Al Gosaibi group meets creditors in Dubai tomorrow in a crucial attempt to reach agreement on about 23 billion Saudi riyals (Dh22.52bn) of debts that have been hanging over the family-owned partnership since 2009.

About 40 regional and international banks, and other creditors, will hear proposals from Al Gosaibi executives to settle the long-running dispute, which has sparked legal actions across three continents. In total, about 80 institutions are owed money by Al Gosaibi.

If a deal is not reached, the prospects for the decades-old Saudi merchant family look stark.

Simon Charlton, the former Deloitte executive now at the helm of the partnership that owns the business, said: “We will present the outline of a proposal to the banks with claims against Al Gosaibi that will maximise their recoveries. It is a commercial, real and genuine proposal made by Al Gosaibi, who themselves are victims. We believe it is in everyone’s interests to consider it. The alternatives are quite horrific for everyone.”

The debts have threatened the partnership since a multibillion default in 2009 involving Al Gosaibi and the Saad Group, owned by Maan Al Sanea, who is related to the family by marriage.

Both sides have denied responsibility for the default or any wrongdoing in a series of legal actions around the world.

No Saudi banks, who hold about a third of the debt, will attend the Dubai meeting. Some Saudis have seized or been awarded Al Gosaibi assets, while others are taking legal action to recover their debts. Judgements in favour of creditors have been awarded in 27 cases in the kingdom, with another 22 pending.

The situation is complicated by a freeze imposed on Al Gosaibi in 2009 preventing or restricting the sale of assets. However, that did not prevent Al Gosaibi from receiving compensation from Pepsi when the American drinks group decided not to renew a licence with Al Gosaibi earlier this year.

Regional and international banks have also brought actions against Al Gosaibi. Some are sceptical that the meeting will produce an acceptable offer.

“I wouldn’t expect too much. There has been litigation for years, and there will be a lot of frustration at the meeting. I think it will be more like group therapy,” said one regional banker involved who asked not to be named because the meeting is private.

“But let’s see what they come up with. I suspect whatever proposal comes will be on the low side, maybe 10 cents in the dollar, with promises of an upside from any recovery from Maan. I think talk of ‘horrific’ consequences is just posturing,” he added.

A previous meeting in Dubai in 2010 failed to reach a settlement.

fkane@thenational.ae

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Published: May 5, 2014 04:00 AM

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