Private Saudi firm Saad Group to restructure debt

DEBT RESTRUCTURING: Saad Group subsidiaries to restructure debt after chairman Maan al-Sanea sees accounts frozen by Saudi authorities. (Getty Images)

Private Saudi firm Saad Group said on Monday it plans to restructure the debt of subsidiaries after bankers said the kingdom's central bank froze the accounts of its billionaire chairman Maan al-Sanea.

"Recent events, specifically affecting the Bahraini banking sector, have led to a short-term liquidity squeeze affecting Saad Group companies in the Middle East," Saad Group said in a statement.

It did not disclose the size of the debt restructuring plan nor the number of the firms that would be affected by this.

"We are continuously striving to mitigate the effects of this limited squeeze, and are also planning for an orderly restructuring of the debt of affected companies in cooperation with our counterparties and international advisers," the firm said.

Saad Group said that it has appointed consultants and was also about to conclude a deal with an unnamed top European bank to manage relations with other lenders to assure "pari passu" treatment.

Three bankers said on Sunday that the Saudi Arabian Monetary Agency (SAMA) has issued circulars telling local banks to freeze the accounts of businessman and HSBC shareholder al-Sanea.

Saad Group made no reference to such a measure in its statement.

Sanea is chairman of the Saad Group - one of Saudi's top family conglomerates - and is closely connected to several Gulf finance firms. Forbes magazine estimated Sanea's net worth at $8.1 billion in 2008.

Sanea owns Bahrain-based Awal Bank, either directly or through Saad Group, according to the bank's website, and is a shareholder in Bahrain's The International Banking Corporation (TIBC), according to commercial registry data.

Sanea made international headlines when he spent 3.3 billion pounds ($5.29 billion) in 2007 to acquire a 3.1 percent stake in HSBC.

One banker, who spoke on condition of anonymity, said the freeze would protect collateral owned by Sanea that may be claimed by borrowers. "For SAMA, it was about defending the reputation of the kingdom, its creditworthiness," he said.

Sanea is married to a daughter of Sulaiman Hamad al-Gosaibi, the recently deceased chairman of the Ahmad Hamad Al Gosaibi and Brothers Group (AHAB). AHAB is a controlling shareholder in TIBC, which suffered a key setback in May when ratings agency S&P lowered its rating to "selective default".

S&P said last week it was considering lowering its ratings on Saad Group due to reduced liquidity and real estate exposure. (Reuters)

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