Thursday, May 8, 2014

Algosaibi Creditors Voice Frustration in Long Running Saudi Dispute


Thu., May 8, 2014

Ahmad Hamad Algosaibi and Brothers, a Saudi family-owned conglomerate that defaulted on its debts near the beginning of the financial crisis in 2009, met with creditors in Dubai on Wednesday to propose a new settlement: a cash payment of about 20 cents for every dollar of debt, plus recoveries it makes through lawsuits against Maan al Sanea, a Saudi businessman the Algosaibis claim caused the defaults through an alleged $10 billion fraud, The Wall Street Journal Middle East Real Time blog reported. The affair is one of the major unresolved financial disputes that rocked the Arab Gulf during the financial crisis. Saddled with bad debts, regional banks responded by stopping the practice of name lending, or lending to companies based on reclusive but wealthy families’ reputations rather than full analyses of their financial health. Under the restructuring proposal, Algosaibi is offering an upfront payment that equals 10% of creditors’ claims as “a sign of good faith” with an additional 10% payout after five years. Depending on the amount the firm recovers through various lawsuits against Al Sanea and two banks, Algosaibi could pay out another 30 cents to the dollar.

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