The Al Gosaibi family of Saudi Arabia has offered a peace deal to Maan Al Sanea, their bitter enemy for the past six years, if negotiations can be entered to end the Middle East’s longest running corporate “frozen conflict”.
“I’d be happy to negotiate a settlement and drop outstanding litigation against Maan and Saad Group [Mr Al Sanea’s company],” Simon Charlton, the chief executive of the family partnership Ahmad Hamad Al Gosaibi and Brothers (Ahab), said last night. “The cost of the continuing actions is becoming counterproductive, and it could take another six years of legal action. If I have to do that, I will but maybe the time has come to negotiate a settlement in this whole affair.”
In May 2009 Ahab defaulted on its debts, sparking the marathon battle with creditors. The Al Gosaibis blamed Mr Al Sanea, a financier who married into their family, and accused him of theft, fraud and forgery, sparking legal actions across three continents. At one stage, it was suggested up to US$20 billion was owed to creditors of either Ahab or Saad Group.
Mr Al Sanea has denied all the accusations and is defending himself in several jurisdictions against actions from Ahab and from creditors.
Mr Charlton was speaking from the Cayman Islands, where legal actions are continuing, after Ahab announced it has reached an initial deal with its leading creditors to settle claims of more than $6bn of debts.
The Ahab deal with some of its creditors was signed in London late last week. It is a big step forward towards solving a six-year-old stand-off between Al Gosaibi and its creditors. But big Saudi banks still have to be persuaded to join in any overall settlement.
The peace offer from Ahab, if taken up, would halt several expensive and complex legal cases. Ahab has a $2.5bn judgment against Mr Al Sanea in the Cayman Islands, which it is seeking to have enforced by the island’s courts. There are also actions in Bahrain, Saudi Arabia and Switzerland. Legal and administration costs in the whole affair are estimated to have hit $100 million.
On the deal with creditors, Mr Charlton said: “We have moved our position significantly and, without question, this deal represents the best option for financial institutions seeking recoveries. We are optimistic that the improvements to our proposal from last May will be well received by the larger group of claimants.”
Ahab met creditors in Dubai a year ago and proposed a guaranteed repayment of 20 cent on each dollar of debt, before possible recoveries from continuing litigation which could bring it up to about 50 cents.
Details of the new terms have not been announced, but it is believed the basic guaranteed payment has been increased significantly.
“We asked for more, they gave more,” said an executive from one creditor bank. “It looks like they were able to come up with more assets to back it. The noises from Saudi are getting better, and it may be they feel it is more in their interests to do a deal now. But it’s still not certain that will happen, and without the Saudis there cannot be a full deal. We will have a better idea by the time of the next creditors meeting.”
The new terms have been agreed with five financial institutions on the steering committee: Arab Banking Corporation, BNP Paribas, Emirates NBD, Standard Chartered and Fortress Investment Group, a US hedge fund.
Now it will be put to about 90 international and Arabian Gulf banks, which are owed about 60 per cent of the total, at another creditors’ meeting.
This is expected to take place in Dubai towards the end of next month.
Most of the remaining debt is held by Saudi banks, which have so far not taken part in the settlement talks and are taking legal action to recover their loans. In total some 109 banks and financial institutions are owned money by Ahab.
“We believe that Saudi Arabian authorities would like to see this matter resolved in a pragmatic and comprehensive manner,” Mr Charlton said. “Upon receiving support from the wider claimant group, we will seek ratification of the settlement in the kingdom.”
“A final settlement agreement must be approved by Saudi Arabian authorities and, in accordance with Sharia law, must treat all claimant financial institutions equally, regardless of their nationality,” Ahab said in a statement.
One option open to Ahab is to apply to the Saudi courts to impose a settlement on Saudi creditors. A judge in Al Khobar, the headquarters of the Al Gosaibi businesses, is considering applications from Saudi creditors seeking enforcement of claims against Ahab assets that have been awarded in other courts in the kingdom.
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