A group of Saudi Arabian lenders has rejected an invitation from Ahmad Hamad Al Gosaibi & Brothers (AHAB) to attend a meeting next month to discuss their claims on US$5.9 billion of debt.
“The banks have no interest in attending the meeting proposed,” according to a letter to Al Gosaibi from a law firm representing the unnamed Saudi lenders and seen by Bloomberg News. The letter, dated April 3, did not give a reason why the banks do not want to attend.
Al Gosaibi and billionaire Maan Al Sanea’s Saad Group missed payments on at least $15.7bn of debt in 2009 in the Middle East’s biggest default, as the global financial crisis froze credit markets and asset prices slumped. The two family holding companies, which are related by marital ties, have been locked in legal disputes ever since.
More than 70 local, regional and international creditors received letters from Al Gosaibi last month inviting them to a meeting on May 7 in Dubai.
The company, which operates in industries from construction to finance, plans to propose a comprehensive settlement on about 22bn riyals (Dh21.54bn) of claims from lenders for unpaid loans, according to Al Gosaibi estimates.
Saudi banks “expect immediate and full payment of all their claims against AHAB, and reserve all their rights to take all appropriate actions to enforce against such claims,” they said in the April 3 letter. Banks rejected Al Gosaibi’s original debt restructuring proposal four years ago.
Units of Al Gosaibi and Saad borrowed from more than 80 regional and international banks to finance expansion into real estate and investments in the kingdom and regionally. One-third of the debt is owed to Saudi banks including Al-Rajhi Bank and National Commercial Bank, a third to other Middle Eastern lenders and the rest to global banks, Simon Charlton, Al Gosaibi’s chief restructuring officer, said in an interview in Dubai on March 25.
Mohammed Al Yami, a spokesman for Al-Rajhi, and an official from NCB, who asked not to be named due to company policy, declined to comment when contacted by Bloomberg News.
Al Gosaibi’s restructuring attempt comes amid a recovery in the Saudi banking industry, which is benefiting from government plans to invest more than $500bn developing infrastructure and industry to boost job creation. Economic growth in the kingdom is forecast at 4.4 per cent in 2014, up from 3.6 per cent last year, data show.
Al Gosaibi “will continue to work toward a comprehensive proposal and settlement and hopes to persuade the Saudi banks directly, and through the Saudi legal system, that they should join this process,” Mr Charlton said. “Saudi tribunals have accepted international claims that predate the Saudi banks’ claims, so it is AHAB’s understanding that the Saudi authorities are unlikely to endorse a settlement that is not a global settlement.”
Mr Charlton, the former head of Deloitte’s forensic services in the Middle East, joined Al Gosaibi last June to help the company restructure its operations, along with Ben Jones, also from Deloitte, who was hired as chief financial officer.
Al Gosaibi “and its advisers have and continue to receive positive responses from a number of banks that are very interested in reaching a resolution,” Mr Charlton said. “After nearly five years, most financial institutions realise a comprehensive settlement is in the best interest of everyone involved.”