Abu Dhabi conglomerate Al Jaber Group, in talks to restructure over $1bn in debt, is close to reaching a standstill agreement with its core lenders, the company said on Thursday.
Al Jaber set up a banks’ committee earlier this year to thrash out a debt restructuring after it announced talks with lenders to discuss the terms of its facilities.
Sources at creditor banks had said the company and its lender committee of five banks had been locked in discussions on a standstill agreement, and are awaiting an announcement imminently.
“The group confirms that it is continuing to move forward with its plans to reschedule its borrowings,” Al Jaber said in an emailed statement.
“As part of this process the group and the CoCom [core committee] are finalising a proposed standstill agreement which is to be presented to the Group’s creditor banks in due course.”
The banks’ committee is chaired by the National Bank of Abu Dhabi , and includes Abu Dhabi Commercial Bank , HSBC , RBS and Union National Bank .
A source familiar with the debt talks said in December that Al Jaber was seeking a one-year delay in the repayment of certain debts. The company has not said how much debt is being restructured.
“A restructuring is a long way down the line for them … at first they will need to agree on a standstill agreement, which usually assists the lenders in getting a lot of extra information on the company and its projects,” another source familiar with debt restructurings in the UAE said.
Al Jaber has significant exposure to indebted Dubai developer Nakheel, a unit of state conglomerate Dubai World undergoing its own restructuring, the source said.
“A lot about the future of some of the Al Jaber companies depends upon the fate of trade creditors’ restructuring being done by Nakheel.”
Al Jaber currently has $840m in two syndicated facilities outstanding as well as bilateral loans. A $440m five-year term syndicated loan is due to mature in September and a $400m (Islamic) ijara facility expires in April 2013.
Al Jaber currently has $840m in two syndicated facilities outstanding as well as bilateral loans. A $440m five-year term syndicated loan is due to mature in September and a $400m (Islamic) ijara facility expires in April 2013.
Another source at a creditor bank said the company was continuing to pay interest while a formal standstill was still being negotiated.
“As of now we’re waiting for them to come with a formal standstill, and waiting for reports from the advisors. In the meantime, they’re continuing to pay interest,” the source said.
When asked whether banks will agree to extending maturities, the source said: “What options do we have? It’s a big name, one of the better names out of the UAE.”
Al Jaber is one of the most prominent private sector family-owned firms in Abu Dhabi, where the acknowledgment of financial difficulties has been minimal, in contrast to neighbouring Dubai, under the spotlight for its debt woes since late 2009.
Typically, recent restructurings in the region have involved rescheduling payments, and hinting at asset sales once valuations recover.
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