Abraaj Group announced that it will meet shareholders and lenders on Monday to discuss its restructuring.
Chief Executive Officer and founder Arif Naqvi and other senior managers will update stakeholders on the talks with potential acquirers of its asset-management business, ongoing deals and media speculation, Abraaj said in a statement.
Such a meeting is “critical” given Kuwait’s recent petition to liquidate, Bloomberg quoted Khalid Howladar, managing director of credit and sukuk advisory Acreditus. “In order to realize fair-asset value for creditors, they need to avoid a fire-sale. It’s hard to negotiate effectively with potential bankruptcy proceedings hanging over the company.”
Previously, Abraaj has expanded U.S. investment bank Houlihan Lokey’s role to include advice on the sale of its investment management unit as the private equity firm prepares to meet creditors over its $1 billion debt, sources familiar with the matter told Reuters.
Dubai-based Abraaj has hired the New York-based bank to help it try to stem the fallout from allegations it had misused investor money in a $1 billion healthcare fund, but the role has since been widened to providing general advice, including the sale of Abraaj Investment Management Ltd, two sources said. The Middle East and Africa’s biggest private equity fund, which denies any wrongdoing, has been seeking a buyer for the unit as it tries to alleviate pressure from investors and creditors.
Parent company Abraaj Holdings has been in talks with two to three potential buyers of Abraaj Investment, Reuters reported last month, including Los Angeles-based Colony Northstar. Colony declined to comment on reports it had walked away from the talks.
Creditors are meeting Abraaj executives on Monday to discuss its ability to pay its debt, another two sources said.
Abraaj confirmed the meeting and said it aimed to “maintain a constructive dialogue with the group’s creditors and make further orderly progress, in the interests of all stakeholders, towards a consensual resolution of all outstanding concerns.”
“Abraaj Holdings is being advised on these matters by Houlihan Lokey,” the firm said in a statement.
Houlihan Lokey did not immediately respond to a request for comment.
Any sale of the investment management unit will likely need approval from bilateral lenders because they might have to agree on potentially taking a haircut on their loans if the valuation for the deal is below the debt, one source said.
As the sale would likely involve a debt restructuring, Houlihan Lokey would be well placed to advise due to its expertise in restructuring, the source added.
Bankers estimate Abraaj Investment is worth about $500 million, while Abraaj’s debt is at least double that amount.