Abraaj seeks Cayman court - supervised restructuring
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.