Saudi group inks deal to end default

Algosaibi and billionaire Maan Al Sanea’s Saad Group defaulted on at least $15.7b in 2009

Ahmad Hamad Algosaibi & Brothers Co. signed a deal with a majority of its creditor banks to restructure about $6 billion (Dh22 billion) of debt, taking the Saudi conglomerate one step closer to ending a seven-year impasse over the Middle East’s biggest default.

The agreement with a fivemember committee representing about 80 banks, which include BNP Paribas SA and Standard Chartered Plc, formally commits Algosaibi and the lenders “to support the implementation of the agreed settlement terms,” the Saudi Arabian company said in emailed statement yesterday.

About 90 per cent creditors, accounting of for the 56 per cent of the value of the debt, have signed the deal, and the remaining lenders will be asked to sign in the next few weeks, Algosaibi said.

Algosaibi and billionaire Maan Al Sanea’s Saad Group, two family holding companies related by marital ties, defaulted on at least $15.7 billion in 2009 as the global economic crisis froze credit markets and asset prices slumped.

Algosaibi, which has interests ranging from construction to shipping, made an improved offer to banks last year, guaranteeing they would recover at least 40 per cent on the debt.

Algosaibi plans to pay creditors at least 28 cents on the dollar using a share portfolio, 3.4 billion Saudi riyals (Dh3.32 billion) of real estate assets and a minority stake in an operating business valued at 300 million riyals. Depending on asset recovery and litigation, it will also pay an additional 6 billion riyals.