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BANKS NOT KEEN ON DEAL

Al Jaber seeks new terms for $4.5bn restructured debt

ABU DHABI, July 2, 2015

Abu Dhabi-based conglomerate Al Jaber Group is talking with banks to refinance around $4.5 billion of debt it restructured last year to improve terms imposed by creditors, three sources aware of the matter told Reuters.

It is the latest company in the UAE seeking to follow state-owned conglomerate Dubai World and renegotiate refinancing deals signed in the wake of Dubai's property crash in 2009.

Family-owned Al Jaber, whose interests range from construction to retail and aviation, is keen to revise the tough terms of its restructured deal, while hoping to take advantage of low interest rates and reduce the interest rate on its debt and extend the maturity of its loans, the sources said, speaking on condition of anonymity as the information isn't public.

Creditors have so far pushed back on any new deal, though, with some claiming the company has not fulfilled the conditions of the original agreement signed in June 2014, one of the sources, a banker based in the UAE, said.

They are also reluctant to embark on a fresh restructuring as the last deal took three-and-a-half years to hammer out.

Al Jaber declined to comment.

"When the restructuring happened they would have been given very tough terms by the banks," said a second source, a UAE-based lawyer.

"When the deal was signed it was clear that it would not be long before everyone would be back at the table."

Striking a deal may prove tricky.

While the company has so far made payments linked to the original deal on time, concerns have been raised about future cashflow because of the company's thin pipeline of projects, the UAE-based banker said.

Al Jaber's credit committee during the first restructuring was chaired by National Bank of Abu Dhabi and included Abu Dhabi Commercial Bank, HSBC Holdings Royal Bank of Scotland and Union National Bank.

The conglomerate has also not made enough progress to improve corporate governance standards, including bringing in sufficient management from outside the family, the UAE banker said.

There have been a number of management changes at Al Jaber, with David Nelson departing as chief executive late last year and chief financial officer Sam Deeb leaving the bank in February.

Creditors are also concerned about the company's slow progress on asset sales, another requirement stipulated by lenders in the last deal.

The sale of the company's heavy lifting business was abandoned, three sources told Reuters in January.

Another source said Al Jaber was also talking to new lenders about securing loans.-Reuters
 




Tags: UAE | debt | Al Jaber |

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