Saudi financier Al Sanea reaches out to international creditors in debt saga

Notice published in a Saudi newspaper last month calling on creditors to register claims against Saad Trading business in the kingdom.

Maan Al Sanea, the Saudi Arabian financier, has decided to open talks with international creditors over US$3 billion of debt in dispute since the collapse of the Al Gosaibi business empire in 2009.

Mr Al Sanea, who is related to the Al Gosaibi family by marriage but estranged since the crash, published a notice in a Saudi newspaper on September 17, calling on creditors to register claims against his Saad Trading business.

“The company invites financial institutions that have claims against the company to send the details of such claims [via email]. Following the receipt of such information, the creditors will be notified of a meeting appointment as soon as possible to discuss these claims,” the advertisement said.

Mr Al Sanea’s legal representative and public relations spokesman declined to comment. But a source familiar with the situation confirmed that the notice had been placed by Saad Trading and was the beginning of a process to reach settlement in the Middle East’s longest-running business dispute.

In 2009, the business of Ahmed Hamad Al Gosaibi and Brothers (Ahab) was forced to the brink of bankruptcy after two Bahrain banks owned by the partnership failed to repay debts. Ahab alleged fraud, forgery and theft by Mr Al Sanea leading up to the collapse. He has consistently denied all these allegations.

It is believed that Mr Al Sanea’s businesses – in Saudi Arabia, Switzerland and the Cayman Islands – owe about $9bn to creditors. The offer to open talks with creditors relates to the approximately 30 per cent of that which is held by the Saudi operation.

The notice is also an attempt to define the current extent of Saad Trading liabilities, and the identities of creditors. The debt has been heavily traded in international markets over the past six years as original bank creditors sold out and wrote down their liabilities. Creditors include Saudi financial institutions, with whom Mr Al Sanea reached an agreement early in the saga, warding off further action by creditors in the kingdom. But he has steadfastly refused to deal with international banks, which are among the Saad Trading creditors.

The source said the notice was a genuine attempt to initiate a settlement process. “It has just gone on for too long, and all parties are beginning to recognise that,” he said.

The Al Gosaibi and Al Sanea families have been banned from travel outside Saudi Arabia since the affair broke, and their financial and business activities have been severely curtailed.

The source also indicated that there had been pressure from the Saudi government, under financial pressure following the sharp decline in oil prices, to settle the dispute, which has been widely regarded as damaging to the kingdom’s reputation in global banking circles.

The affair led to a rash of legal actions against Ahab and Saad Trading. A case in New York was dropped after an American judge decided it should be heard in Saudi Arabia. Last month, a Swiss prosecutor announced it had halted a six-year investigation against Saad Trading businesses in the country.

However, legal actions are ongoing in Bahrain and the Cayman Islands, where Mr Al Sanea had significant operations and where most of his debts are located. Earlier this year, investment vehicles owned by Awal Bank, one of the Bahrain banks that collapsed in 2009, filed for bankruptcy protection in the US courts.

However, Mr Al Sanea’s olive branch to creditors could be just the start of a long process of negotiation. Ahab, which has been talking to creditors since 2010, said in June that creditor representatives had approved a plan to repay a guaranteed minimum of 28 cents on the dollar of their $6bn of debts.

Follow The National's Business section on Twitter