Abraaj seeks Cay­man court - su­per­vised re­struc­tur­ing

The National - News - - BUSINESS - SARMAD KHAN

The Abraaj Group is seek­ing a court-su­per­vised re­struc­tur­ing as the em­bat­tled pri­vate eq­uity com­pany tries to pro­tect its as­sets and limit the fall­out of al­le­ga­tions of mis­us­ing in­vestors’ funds and amid le­gal bat­tles with some of its cred­i­tors.

The com­pany has filed an ap­pli­ca­tion in the Grand Court of the Cay­man Is­lands where it is reg­is­tered, seek­ing the ap­point­ment of three rep­re­sen­ta­tives of Price wa­ter house Coop­ers as joint pro­vi­sional liq­uida­tors (JPLs), it said on Thurs­day.

The move aims to pro­tect the rights of all stake­hold­ers while JPLs work on a “con­sen­sual re­struc­tur­ing” of the com­pany’s obli­ga­tions, it said. The ap­point­ment of liq­uida­tors im­poses a mora­to­rium on the en­force­ment of all un­se­cured claims against Abraaj, al­low­ing time for a pro­posal to be put to the cred­i­tors.

The liq­ui­da­tion move has the sup­port of the com­pany’s se­cured cred­i­tors who want to work along­side Abraaj to re­struc­ture its li­a­bil­i­ties, the buy­out com­pany said.

A se­cured cred­i­tor is a lender or cred­i­tor that ex­tends cap­i­tal or is as­so­ci­ated with an in­vest­ment that is backed by col­lat­eral.

“The process of court-su­per­vised re­struc­tur­ing will take a few months. I will con­tinue to sup­port this or­derly process,” Abraaj founder and chief ex­ec­u­tive Arif Naqvi said.

“This process marks the cul­mi­na­tion of an ex­treme New

ly com­plex and chal­leng­ing phase of ne­go­ti­a­tions ... since our dif­fer­ences with cer­tain in­vestors first came to light, we have worked ex­haus­tively and trans­par­ently to in­ves­ti­gate the mat­ter and ad­dress their con­cerns.”

The Mid­dle East’s big­gest buy­out com­pany, which at its peak had more than $13.6 bil­lion (Dh49.96bn) of as­sets un­der man­age­ment, is reel­ing from al­le­ga­tions of mis­us­ing funds in a health­care in­vest­ment ve­hi­cle that de­ployed cap­i­tal from in­vestors in­clud­ing the Bill & Melinda Gates Foun­da­tion, the World Bank’s In­ter­na­tional Fi­nance Cor­po­ra­tion, the United King­dom’s CDC Group and Proparco Group of France.

The com­pany has de­nied any wrong­do­ing.

It has been un­der in­tense pres­sure from cred­i­tors and stake­hold­ers since Fe­bru­ary as the al­le­ga­tions snow­balled.

The group has tried to re­or­gan­ise its busi­ness, with Mr Naqvi ced­ing con­trol of the funds man­age­ment busi­ness, which the com­pany is try­ing to sell along with its stakes in other com­pa­nies to re­solve liq­uid­ity is­sues.

Abraaj has al­ready raised $52 mil­lion by sell­ing its en­tire share­hold­ing in Egyp­tian con­trac­tor Oras­com Con­struc­tion. The com­pany off­loaded more than 6.25 mil­lion shares, or a 5.4 per cent stake, in the con­tract­ing com­pany at $8.30 per share, Oras­com Con­tract­ing said on Thurs­day in a share­hold­ing dis­clo­sure to Nas­daq Dubai, where its stocks are traded.

De­spite the turbulent times, ap­prox­i­mately 50 com­pa­nies in the cur­rent gen­er­a­tion of Abraaj funds have kept grow­ing, Mr Naqvi said. “Pro­vi­sional liq­ui­da­tion of Abraaj Hold­ings will cre­ate a more con­trolled ba­sis for mov­ing for­ward, with­out im­pact­ing the day-to-day man­age­ment of the funds and the un­der­ly­ing port­fo­lio busi­nesses,” he said.

It is not clear how the pro­vi­sional liq­ui­da­tion move by Abraaj will im­pact the le­gal chal­lenges it is fac­ing from its un­sourced cred­i­tors.

Kuwait’s Pub­lic In­sti­tu­tion for So­cial Se­cu­rity ear­lier this month filed a pe­ti­tion in a Cay­man Is­lands court seek­ing liq­ui­da­tion of Abraaj after it de­faulted on a $100m loan that was due on June 3.

Auc­tus Fund is the se­cond cred­i­tor this month to file a law­suit against Abraaj, ac­cord­ing to a Reuters re­port.

An Abraaj rep­re­sen­ta­tive did not re­spond to a re­quest for com­ment.

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