Saad Group, the company owned by the Saudi billionaire Maan al Sanea, Monday denied reports of a freeze on its assets in Kuwait and said its accounts in Saudi Arabia were "stable". The embattled company said it was close to announcing its proposal for a co-ordinating bank and a "top four" accounting firm to represent the interests of counter-parties in its debt restructuring plan. The statement follows the appointment of the business law firm Lawrence Graham as legal adviser and BDO Corporate Finance as financial adviser.
Saudi Arabia's central bank last month ordered the group's accounts in the kingdom be frozen. Bankers said Gulf markets might see spill-over effects among other family-owned companies in the region. "This serves as a reminder that the credit crunch continues to affect people and companies," said Mohieddine Kronfol, the managing director at Algebra Capital in Dubai. "This raises issues of investors' rights and how creditors are treated. Finally, it has large implications for family businesses in the region, as they will face higher costs of funding and increased demands for transparency."
Mr Kronfol said the focus would also be on the Saudi Arabian Monetary Agency (SAMA). "Everybody will look at how the creditors will be dealt with and how quickly the regulator can deal with the restructuring, as well as the role regulators had, if any, in the crisis." On Sunday, Al Rai newspaper reported that the Central Bank of Kuwait had frozen accounts relating to the Saad Group and the Gosaibi Group, which is owned by the al Gosaibi family.
"Saad is working towards a resolution of this matter, which it hopes can be achieved, and is grateful for the efforts of a group of prominent businessmen who, supported by the authorities, are likewise working to find a swift and positive outcome," the company said in a statement. The difficulties facing the Saad Group have prompted speculation over whether other family-run Gulf businesses may face closer scrutiny by lenders and ratings agencies.
"I do not think it is far-fetched to expect some businesses finding it difficult to fund their capital requirements going forward," said Yazan Abdeen, a fund manager at ING Investment Management. Mr Abdeen said this would be particularly true for family-owned businesses with heavy exposure to property and companies that were little diversified. "The triangle of Saudi, Bahraini and Kuwaiti banks is definitely the most exposed, but the issue is whether there is also UAE banking exposure," Mr Abdeen said.
The ratings agencies Moody's and Standard & Poor's withdrew their ratings of the company last week. Mr al Sanea established the Saad Group in the 1980s and became one of Saudi Arabia's most prominent businessmen. He is also a major shareholder in HSBC and Samba Financial Group. uharnischfeger@thenational.ae