Abraaj and creditors set to agree on debt standstill

Media reports suggest that Cerberus Capital Management has offered $125 million for the firm's private equity business
Abraaj and creditors set to agree on debt standstill
By Staff writer
Tue 05 Jun 2018 10:20 AM

The secured creditors of embattled private equity firm Abraaj have agreed to refrain from action over outstanding debts as Cerberus Capital Management offered $125 million to acquire it, it was reported on Monday evening.

On Monday, Abraaj CEO and founder Arif Naqvi and other senior managers of Abraaj met with stakeholders to update them on discussions with potential acquirers of its asset-management business, as well as ongoing deals and media coverage of the firm, Abraaj said in a statement.

“The secured creditors are expected to imminently conclude a standstill which will provide Abraaj the ability to meet its obligations in an orderly fashion,” Abraaj said in a statement, adding that such a move would allow it to “move forward resolve outstanding issues.”

According to two anonymous sources cited by Reuters, the standstill will Abraaj’s debt frozen for between 90 and 120 days. The sources estimated that Abraaj’s total debt is approximately $1 billion.

However, Abraaj still needs to secure a deal with its unsecured creditors, including the Kuwaiti Public Institution for Social Security, which has begun liquidation proceedings in the Cayman Islands dude to Abraaj being unable to pay a $100 million debt, with $7 million interest.

A sourced cited by the Wall Street Journal said that the Kuwaiti fund would not agree to a debt standstill.

Citing sources familiar with the investigation, the newspaper also noted that Cerberus Capital Management LP has offered $125 million for the firm’s private equity business, which would involve existing investor commitments being transferred to a new company.

The sourced cited by the WSJ noted that the deal would not include Cerberus taking on any existing liabilities of Abraaj’s fund-management business or holding company.

Abraaj has been under intense pressure since various investors commissioned an audit in February to investigate the alleged mismanagement of money in a $1 billion healthcare fund.

Preliminary findings of another review, conducted by Deloitte, have suggested that there are also discrepancies in several of Abraaj’s other pools.

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