Citi, IBQ hold up Abu Dhabi firm's $4.5bn debt talks
Abu Dhabi, October 9, 2013
Citigroup and International Bank of Qatar (IBQ) are holding up negotiations to restructure $4.5 billion in debt of Abu Dhabi conglomerate Al Jaber Group, further complicating drawn-out talks, three sources familiar with the matter said.
Al Jaber is one of the most prominent private sector firms in Abu Dhabi, which has generally suffered fewer corporate problems than neighbouring Dubai since the financial crisis.
With operations in construction, aviation and retail, Al Jaber set up a five-bank creditor committee in 2011 to negotiate a restructuring after it became difficult for the firm to service its debt on maturity.
The two banks that are holding up talks represent only a small portion of the creditors negotiating the debt, the sources said, speaking on condition of anonymity as the matter is not public. Spokesmen for Al Jaber and Citigroup declined to comment. IBQ was not available for comment.
"Everything is agreed to, except one per cent of banks are holding out. Because there is no bankruptcy law in the UAE ... they don't know what to do with this one per cent," a senior Abu Dhabi-based banker with knowledge of the matter told Reuters.
The source added that Citigroup was planning to sell the loans in the secondary market at a discount to cut its exposure. This might not end the uncertainty over the restructuring, though, depending on the purchaser.
"We think it's a pretty solvable problem. (Al Jaber) has good assets and cash flow," the source said.
Another source said that Al Jaber was in close discussions with the banks holding up the process and was optimistic of an agreement in the near future.
Like many family-owned groups in the Gulf, Al Jaber looked to expand beyond its core business - in Al Jaber's case, construction - but was then dragged down by poor performance in these new fields, the weight of debt raised to achieve the expansion and a slowdown in the local construction sector.
Most of the debt restructurings negotiations in the region, have been agreed with creditors by extending maturities and offering full repayment of the debt after a certain number of years, mostly through asset disposals.
Al Jaber's credit committee is chaired by National Bank of Abu Dhabi and includes Abu Dhabi Commercial Bank , HSBC Holdings, Royal Bank of Scotland and Union National Bank.-Reuters