ABU DHABI, (Reuters) – Unraveling money trails left by two Saudi firms mired in massive debt restructuring will likely take years, sources said, after initial talks to track down billions of dollars in unpaid obligations ended in disappointment.
This week’s talks, convened to assess a complex array of contracts, liabilities and legal claims related to Ahmad Hamad Algosaibi & Bros (AHAB) and Saad Group, drew some 100 bankers, lawyers, creditors and accountants.
The firms’ debt troubles and ensuing legal battles have sent shockwaves through the Middle East’s financial sector, calling into question the region’s regulatory framework and lending practices.
The amount of debt that may have to be written off remains unclear. Estimates published in the media range from $6 billion to $10 billion, though behind closed doors Gulf bankers say that the cost may hit $22 billion, with around 120 banks affected.
‘NO ACTION PLAN’
“Nothing came of the meeting, no action plan. We are hoping for another meeting but no date has been set,” a senior Abu Dhabi-based banker who attended told Reuters on Thursday.
The meeting, expected to be the first of many, was organized in Dubai by Algosaibi.
Lawyers and bankers involved say the debt trail touches scores of financial companies across the region and abroad.
“It’s still at the due diligence stage: what liabilities have the different institutions involved, what are the legal claims?,” a lawyer with knowledge of the situation said.
“There will be a multiplicity of meetings at different levels to come. This may take years to solve,” the lawyer said.
“There is not much clarity yet on the debt restructuring … it may take some time,” added the Abu Dhabi-based banker, who declined to be named for reasons of confidentiality.
“The Algosaibi officials provided an overview of the issue, discussions on the figures took place, but nothing substantial. What creditors want to know is how the groups will repay and when and that is not clear.”