Saudi ‘Algosaibi’ to end 12-year debt dispute

Creditors of the Al-Gosaibi group have voted to approve the debt settlement proposal, under which the Saudi group will pay its creditors $ 1.9 billion.

The creditors vote came two months after the commercial court in Dammam, Saudi Arabia approved the Algosaibi Group’s financial reorganization proposal, and the owners voted to approve it on August 27.

وبموجب المقترح الذي ينهي نزاع ديون دام 12 عاما, يحصل الدائنون على 7.25 مليار ريال (1.93 مليار دولار) وهو ما يمثل نحو 26% من مطالبات الديون التي تم إقرارها والبالغة 27.5 مليار ريال (7.33 مليار دولار) بحسب ما ذكرته مصادر مطلعة لفوربس Middle East.

The deal includes 4.7 billion riyals ($ 1.25 billion) in cash and shares that will be liquidated and distributed immediately, with the remaining part being assets worth 2.5 billion riyals (about 667 million dollars) which will be in the form of real estate in the Kingdom, according to the statements of Simon Charlton, head of restructuring in charge of acting as CEO of the group Ahmed Hamad Algosaibi & Brothers.

The Saudi group intends to distribute two-thirds of the settlement amount (cash) in the current year, while the remaining asset-related part could take some time.

The Ahmed Hamad Al-Gosaibi and Brothers group and the Saad group, owned by businessman Maan Al-Sanea, defaulted on debts worth $ 22 billion in 2009, and since then a Dispute erupted between the Al-Gosaibi family and Al-Sanea – who is married to the Al-Gosaibi family – over the cause of the collapse of the two companies.

At the start of the crisis, the Al-Gosaibi family claimed that they were not the culprit, but rather the victim of an estimated $ 9 billion fraud, whose hero is Al-Sanea himself, who – according to the group’s claim – had full control of the finance companies within the group, despite his resignation two years after its creation, more precisely in 2005. Al-Sanea was named one of the 100 richest billionaires in the world in 2007, with a fortune estimated by Forbes at $ 10 billion.

Algosaibi’s creditors committee includes Banque Saudi Fransi, Riyad Bank, HSBC, Gulf Bank in Kuwait and Gulf International Bank in Bahrain.

In previous statements to Forbes Middle East, the acting CEO of Al-Gosaibi Group said, “The offer is earning around 3-4 times more to creditors than they would have received in a forced liquidation.

Under the settlement agreement with the creditors, Algosaibi will establish a fund which will transfer the agreed assets to its ownership, and the ownership of this fund will pass to the creditors. At the same time, liquidity will be provided by the sale of shares of public companies in Saudi Arabia. The group owns shares in 16 companies listed on Tadawul, but most of the shares are concentrated in banks.

The group will insure 5.25 billion riyals ($ 1.4 billion), while the owners will pay 2 billion riyals ($ 533 million). Saudi banks account for 25% of creditors, while the remaining percentage is split equally between international and Gulf banks.

It is expected that the company will continue to operate normally after the settlement. According to Simon, the Algosaibi Group has not ceased its activities in recent years, but is under the direction of a committee appointed by government authorities.