Saudi court issues final order on Algosaibi family’s conglomerate ending 12-year debt dispute

RIYADH: A court in Saudi Arabia on Sunday issued a final order on the restructuring of the Saudi conglomerate Ahmad Hamad Algosaibi and Brothers (AHAB) closing down the largest family debt case in the history of Saudi Arabia.

The Dammam commercial court on Sunday issued the final ratification order for the AHAB restructuring, which is now unappealable, Simon Charlton, chief restructuring officer at AHAB, told Reuters.

“The company will now take steps to begin lifting the restrictions over assets and begin liquidating assets to be able to make distributions to its approved creditors,” he said.

AHAB had reached settlement under Saudi Arabia’s new bankruptcy law, which allows creditors to vote on the debt settlement plan. 

Saudi Arabia’s bankruptcy law, which came into effect in 2019, is an important step toward making the Kingdom more investor-friendly, offering a legal framework to struggling companies seeking to restructure debt following the 2009 global financial crisis. 

Before the introduction of the law, modern bankruptcy legislation did not exist in Saudi Arabia, meaning the main options for defaults were liquidation or cash injections.

Creditors had been pursuing AHAB and Saad Group, another Saudi conglomerate, since they defaulted on about $22 billion in combined debt in 2009.

AHAB’s creditors include local, regional and international banks. About a third of the firm’s debt has been traded for years by banks’ trading desks and hedge funds.

Under the settlement, AHAB’s creditors are expected to receive about 26 cents on the dollar for debt claims totaling SR27.5 billion riyals (about $7.3 billion), Charlton said.

The settlement assets include over SR800 million in cash, a portfolio of publicly traded shares worth about SR3.7 billion, and real estate assets in Saudi Arabia.

The company will retain its core operating assets and plans to rebuild those businesses and the restructured group, possibly by raising external financing, Charlton said, adding that funding plans were at an early stage.

Samah Algosaibi, an executive board member, told Arab News that the conglomerate will now get the final orders uploaded to the online judicial systems (Najiz portal) so that restrictions on the group’s assets are lifted and “terms of the proposal can be fulfilled.” 

The ruling is the first of its kind since the introduction of the new bankruptcy laws, she said it would be difficult to predict the timeframe for the implementation of the procedures.

Algosaibi said: “Through our efforts in recovering assets, we have managed to build up a significant cash balance that can be distributed almost immediately once restrictions are lifted.”

She added: “The publicly quoted shares ought to be capable of being liquidated quickly, so we remain hopeful of making significant distributions before the end of the calendar year.

Real estate will take more time, so the parties have agreed to set up a regulated fund to manage the real estate carefully and maximize recoveries from it. In addition, the real estate fund will be owned by creditors, so the title in the assets will transfer to creditors quickly,” Algosaibi said.