Arab News, Monday, Oct 4, 2021 | Safar 27, 1443
Saudi Algosaibi family seeks lifting freeze on assets after court ends 12-year debt dispute
Saudi Arabia:
A court in Saudi Arabia on
Sunday issued a final order on the restructuring of the Saudi conglomerate Ahmad
Hamad Algosaibi and Brothers (AHAB) closing down the largest family debt case in
the history of Saudi Arabia.
Samah Algosaibi, an executive board member, told
Arab News that the conglomerate will now get the final orders uploaded to the
online judicial systems (Najiz portal) so that restrictions on the group’s
assets are lifted and “terms of the proposal can be fulfilled.”
The ruling is the first of its kind since the
introduction of the new bankruptcy laws, she said it would be difficult to
predict the timeframe for the implementation of the procedures.
Algosaibi said: "Through our efforts in recovering
assets, we have managed to build up a significant cash balance that can be
distributed almost immediately once restrictions are lifted.”
She added: “The publicly quoted shares ought to be
capable of being liquidated quickly, so we remain hopeful of making significant
distributions before the end of the calendar year.
Real estate will take more time, so the parties
have agreed to set up a regulated fund to manage the real estate carefully and
maximize recoveries from it. In addition, the real estate fund will be owned by
creditors, so the title in the assets will transfer to creditors quickly,"
Algosaibi said.
The Dammam commercial court on Sunday issued the
final ratification order for the AHAB restructuring, which is now unappealable,
Simon Charlton, chief restructuring officer at AHAB, told Reuters.
“The company will now take steps to begin lifting
the restrictions over assets and begin liquidating assets to be able to make
distributions to its approved creditors,” he said.
AHAB had reached settlement under Saudi Arabia’s
new bankruptcy law, which allows creditors to vote on the debt settlement plan.
Saudi Arabia’s bankruptcy law, which came into
effect in 2019, is an important step toward making the Kingdom more
investor-friendly, offering a legal framework to struggling companies seeking to
restructure debt following the 2009 global financial crisis.
Before the introduction of the law, modern
bankruptcy legislation did not exist in Saudi Arabia, meaning the main options
for defaults were liquidation or cash injections.
Creditors had been pursuing AHAB and Saad Group,
another Saudi conglomerate, since they defaulted on about $22 billion in
combined debt in 2009.
AHAB’s creditors include local, regional and
international banks. About a third of the firm’s debt has been traded for years
by banks’ trading desks and hedge funds.
Under the settlement, AHAB’s creditors are
expected to receive about 26 cents on the dollar for debt claims totaling SR27.5
billion riyals (about $7.3 billion), Charlton said.
The settlement assets include over SR800 million
in cash, a portfolio of publicly traded shares worth about SR3.7 billion, and
real estate assets in Saudi Arabia.
The company will retain its core operating assets
and plans to rebuild those businesses and the restructured group, possibly by
raising external financing, Charlton said, adding that funding plans were at an
early stage.