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Saudi Arabia’s Algosaibi Said to Owe $9.2 Billion to Banks

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  • Saudi Arabia’s Algosaibi Said to Owe $9.2 Billion to Banks

    Saudi Arabia’s Algosaibi Said to Owe $9.2 Billion to Banks

    By Zainab Fattah and Camilla Hall
    June 26 (Bloomberg) -- Ahmad Hamad Algosaibi & Brothers Co., the Saudi family holding company whose Bahraini bank has defaulted, owes 34.6 billion Saudi riyals ($9.2 billion) to more than 100 banks, two people familiar with the situation said.
    The Algosaibi group held a meeting with creditors in Bahrain June 24 to ask for a grace period of 90 days to investigate the debt, said one person involved in the talks, who declined to be identified because the information is confidential. A spokesman for the company had no immediate comment when contacted by Bloomberg News.
    Algosaibi said June 11 it had discovered “substantial irregularities” within its financial services arm after The International Banking Corporation BSC in Bahrain defaulted on debt. An Algosaibi spokesman said last month that Maan al-Sanea, the Saudi billionaire who owns a stake in HSBC Holdings Plc, managed TIBC. A spokesman for Saad Group, al-Sanea’s holding company, denied he had a management role at the bank.
    The Saudi Arabian Monetary Agency on May 28 froze the accounts of al-Sanea, according to a person who read the central bank’s circular. Five days later, Saad Group, which is based in Al-Khobar in Saudi Arabia’s Eastern province, said it was restructuring debt because of “a short-term liquidity squeeze.”
    Moody’s downgraded Saad by five levels to below investment grade before withdrawing the rating because of a lack of “adequate” information about the company’s finances.
    Al-Sanea, who married into the Algosaibi family, ranked No. 62 among the world’s richest people by Forbes in March, with an estimated net worth of $7 billion.
    Steering Groups
    Algosaibi is setting up steering groups for each of its four financial divisions to figure out how to repay debt. The company bottles Pepsi Cola in Saudi Arabia and holds stakes in banks such as Arab National Bank and Saudi British Bank, according to its Web site.
    Banks that provided at least $64 billion to Saudi borrowers in the past five years as record oil prices spurred economic growth for the world’s biggest crude exporter now risk losses because the country’s first recession in a decade is threatening the wealth of some of the most powerful families.
    International banks hold 30 percent of the debt of Algosaibi’s four financial divisions, TIBC, Saudi Arabia-based Money Exchange, Bermuda-based Algosaibi Trading Services, and Bahrain-based Algosaibi Investment Holding, according to the two people, who are involved in the talks to restructure the debt. Another 30 percent is owed to Saudi-based banks and the remaining 40 percent to banks from the other five members of the Gulf Cooperation Council.
    BNP Paribas SA and Citigroup Inc. provided about $500 million each in syndicated loans to companies owned by al-Sanea and the Algosaibi family, according to a document obtained by Bloomberg News. The banks top a list of 37 creditors that provided $5.6 billion in syndicated loans to units of Saad Group. The creditors lent another $700 million to Algosaibi.

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx