Arcapita to Weigh Loan Offers From Fortress, Goldman

Arcapita Bank BSC, an Islamic-compliant fund manager, will consider a revised offer for a bankruptcy-exit loan from Fortress Credit Corp. to compete with a proposal from Goldman Sachs International.

Both loan offers of $350 million would fund Arcapita’s exit from Chapter 11 protection, Fortress said in papers filed today in U.S. Bankruptcy Court in Manhattan. Fortress said it had been in talks since last year to provide an exit loan to Arcapita and was disappointed that the company and its creditors’ committee chose the Goldman Sachs offer.

“It is unclear to Fortress why both the debtors and the committee have lent their support to the GSI proposal,” Fortress said in its filing.

Fortress, which is also an agent to Arcapita’s bankruptcy operating loan, said that the Goldman Sachs proposal may have been influenced by a conflict of interest and might allow some unsecured creditors, including members of the creditors’ committee, to improve their positions in Arcapita’s capital structure relative to other unsecured creditors.

Arcapita and its creditors will “seek approval of the best exit facility proposal, whether that proposal comes from Fortress or GSI,” Fortress said. A hearing is set for May 15.

No Fees

Fortress said its revised offer would fund Arcapita’s exit at a better price, doesn’t include administrative fees, and won’t make Arcapita pay if it enters into an alternative transaction. Fortress also would allow Arcapita keep as much as $30 million in sale proceeds, according to court papers.

Arcapita, based in Manama, Bahrain, filed for Chapter 11 protection in March 2012 after being unable to complete an out-of-court restructuring of $1.1 billion in unsecured debt. It listed assets of $3.06 billion and debt of $2.55 billion.

When its bankruptcy began, Arcapita had interests in 39 companies, and $7 billion in assets under management. Arcapita has minority interests in 80 percent of its investments.

The case is Arcapita Bank BSC, 12-bk-11076, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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