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AP Interview: CEO hopes to settle Saudi firm’s $6B of debts

DUBAI, United Arab Emirates — A Saudi company that’s owed $6 billion in debt since a 2009 crisis hopes to soon reach a tentative agreement with its creditors and present it to officials in the kingdom by July, its acting CEO said Thursday.

The size of the fallout after the default by Ahmad Hamad Algosaibi and Brothers Co., coupled with Saudi Arabia’s opaque bankruptcy regulations, has meant that over six years have passed without any resolution to the financial dispute.

Now that Saudi Arabia is moving to amend its bankruptcy laws and the kingdom is keen to boost investor confidence ahead of a possible public offering of its state-owned oil company, the time may be right for the company’s debts to be finally settled, CEO Simon Charlton said.

“It’s untried, untested new territory and new ground, but we’re hopeful we’ll be able to achieve a successful settlement that will be equal and fair to all claimants,” Charlton told The Associated Press on the sidelines of a meeting with creditors in Dubai.

Ahmad Hamad Algosaibi and Brothers Co., known by the acronym AHAB, made a series of bad loans to some 110 international banks and institutions. As financial markets tightened during the Great Recession, the company began defaulting on those loans. It quickly spiraled, becoming one of the largest corporate defaults in Mideast history.

The firm’s founding al-Gosaibi family responded by alleging that Maan al-Sanea, who married into the family and worked in AHAB, had issued a series of fake loans. Al-Sanea, once described as a billionaire by Forbes magazine and who formerly held a significant portion of stock in HSBC bank, has long denied the allegations. A string of lawsuits against al-Sanea and his interests around the world followed.

AHAB has been working to find a way to bring all its creditors into agreement about how to settle the outstanding debt.

Under the current deal, AHAB would guarantee repaying debts “25 to 30 cents” on the dollar based on its assets, Charlton said. Based on the company’s outstanding debts, the payout could be as much as $1.8 billion.

He said the company hoped that its lawsuits, if successful, would boost that payout to “40 to 60 cents on the dollar.”

If a majority of creditors agree, Charlton said he hoped AHAB would present the proposed plan to a Saudi enforcement court before the Muslim holy fasting month of Ramadan begins in July. However, he stressed Thursday that creditors had yet to formally agree on the proposal, though many seemed to be warming to the idea.

The settlement proposal comes as Saudi Arabia’s budget is squeezed by low oil prices. The kingdom is considering offering shares of Saudi Arabian Oil Co., the world’s largest oil producer, to the public.

An AHAB settlement would send a “good message to international markets and international investors,” Charlton said. “I think it will give people a lot of comfort if they know … (there’s) a system and a process that’s fair and equal.”

In related news, Saudi Aramco expects oil prices to rise by end of 2016.

Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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