Ahmad Hamad Algosaibi & Brothers Co. is offering to guarantee banks they will recover at least 40 percent more on $6 billion of debt as it seeks to end a six-year impasse after the Middle East’s biggest default.
The Saudi Arabian company proposed to pay at least 28 cents on the dollar, chief restructuring officer Simon Charlton told reporters Tuesday after a creditor meeting in Dubai, an improvement on an offer made in May 2014.
Algosaibi intends to pay creditors using a share portfolio worth 2.7 billion Saudi riyals ($720 million), 3.4 billion Saudi riyals of real estate assets and a minority stake in an operating business valued at 300 million riyals, Charlton said. Depending on asset recovery and litigation, it will also pay an additional 6 billion riyals, with any recoveries above that shared between banks and the company, he said.
“I am cautiously optimistic that we will now proceed to a formal settlement, but there’s a long way to go,” Charlton said. “We look forward to presenting the terms to the Saudi authorities.”
The new proposal, made Tuesday to more than 80 banks, was approved by a steering committee of five lenders in April and builds on the one offered to creditors last year. In that offer banks were guaranteed at least a 20-cent payment on each dollar owed and an additional 30 cents depending on asset recovery and litigation, a presentation made at the time shows.
Algosaibi and billionaire Maan al-Sanea’s Saad Group defaulted on at least $15.7 billion in 2009 as the global economic crisis froze credit markets and asset prices slumped. The two family holding companies, connected by marital ties, have been locked in legal disputes ever since. Algosaibi’s interests range from construction to the shipping industry.
As part of the new offer, the 19 partners of Algosaibi have pledged to disclose their personal assets to creditors in an effort to increase transparency over the family’s finances.
Units of Algosaibi and Saad borrowed from lenders to finance investment and expansion into real estate. Lenders filed about 22.5 billion riyals of claims for unpaid loans in countries including the U.S., U.K. and Saudi Arabia, according to estimates by Algosaibi.
A total of 84 percent of claimant institutions are engaged in the settlement process and the steering committee has started the next level of engagement to produce a final, binding agreement, Charlton said.
Saudi Arabian banks didn’t attend Tuesday’s meeting in Dubai and have so far refused to participate in creditor discussions with Algosaibi.