Maan al-Sanea accounts frozen

[Laura M Arabi]

The Saudi central bank has frozen the accounts of billionaire businessman Maan al-Sanea as the global financial crisis impacts businesses in the world's leading oil exporter, bankers confirmed on Monday.

The Saudi Arabian Monetary Agency (SAMA) sent letters to banks late last week ordering a freeze of accounts held by Sanea and members of his family, the bankers said, requesting anonymity.

The Al-Watan daily reported on Sunday that SAMA has frozen the assets of Sanea, CEO of the Saad Group.

Sanea had made major investments in global banks such as HSBC and Citigroup before the credit crisis hit last year.

In March Sanea, 54, ranked number 62 on Forbes magazine's rich list, with a fortune estimated at $7 billion.

Saudi bankers said no reasons were given for the freeze, and Sanea and the Saad Group in Al-Khobar have not commented publicly.

But the move comes after trouble in Bahrain-based the International Banking Corp (TIBC), which Sanea has reported links to.

Over the past month TIBC has defaulted on a significant level of debt obligations, according to Standard & Poor's Ratings Services, which downgraded TIBC's credit rating on May 12.

The bank is controlled by the Saudi Algosaibi Group, which has said it is restructuring its finances.

Sanea is married to a member of the Algosaibi family, and in the past was identified as a managing director in the group.

[Saladin]

UAE orders banks to halt loans to Saad
Jun 10, 2009 at 12:54


The Central Bank of the United Arab Emirates has ordered lenders to halt loans to Saudi billionaire Maan al-Sanea and three private Saudi businesses, sources familiar with the matter told Zawya Dow Jones on Wednesday.

In the central bank circular, local lenders are told to "not allow any new facilities to the captioned groups till further instructions".

These are Al Gosaibi Trading Services Ltd., Ahmad Hamad Al Gosaibi & Brothers, or AHAB, and Saad Trading & Contracting Co the sources said, citing the central bank circular.

The circular asked UAE. banks to "setoff your exposure against available assets in their names subject to your legal documentation".

Difficulties in meeting debt obligations at Saad, owned by Sanea, and at the Bahraini subsidiary of another private Saudi firm, Ahmad Hamad Al Gosaibi & Brothers Co, have raised concerns that some family-run businesses in the oil-rich Gulf are increasingly being affected by the fallout of the world financial crisis.

A Saad Group spokesman was not immediately available for comment and officials at AHAB weren't immediately able to comment.

The UAE's action is an indication of regional lenders' anxiety about their exposure to businessman Sanea and the three private companies.

"I think the issue here is these family groups and their transparency across the region," says Giyas Gokent, chief economist for National Bank of Abu Dhabi. "Any time there are problems with companies, it makes banks more nervous to lend."

[Saladin]

June 9, 2009

Berkeley Group said on Tuesday its largest investor, Saudi Arabia's Saad Group, has sold 16 million shares in the UK construction company at a discounted 701 pence ($11.32) each.

"It is our understanding Saad has sold 16.1 million shares at 701 pence," a company spokesperson at Berkeley said. "I hope that Saad resolves any issues that it has," he added.

Shares in the housebuilder dipped as low as 13 percent on the news, after closing at 825 pence on Monday.

Saad declined to elaborate.

"We have no comment to make on individual transactions. We are continuing to make progress with the restructuring plan announced last week and will update you further in due course," said a London based spokesman on behalf of Saad Group.

Saad Group said last week said it would restructure its debt after it ran into unspecified difficulties and the Saudi central bank froze the accounts of its billionaire Chairman Maan al-Sanea.

The situation has become bleaker for Saad, and the Gulf Arab countries in general, when ratings agency Moody's said on Monday that Saad's issues will affect the way it assesses privately held firms across the region.

Saad held 37.7 million Berkeley shares, nearly 29 percent of the company, at the end of April.

On an operational level, the only impact from Saad's difficulties will be felt by Berkeley's joint venture with its largest investor.

The companies announced a joint venture in April 2007 with the housebuilder contributing a maximum of 175 million pounds to three joint venture firms, which would focus on building up a long-term landbank of sites that could be developed over the next decade.

The housebuilder said on Tuesday the joint venture is a small, long-term project which will not affect the group.

"It's a tiny part of Berkeley's operations," said a Berkeley spokesman.

"The timescales will shift a little, I don't think it really changes a great deal of what Berkeley might have the ambition to do," Robin Hardy at KBC Peel Hunt told the news agency Reuters.

Meanwhile, Saad said on Tuesday it is making progress with a restructuring plan.

[Laputi]

Bank Muscat's exposure to Saad tops $171 mln
Jun 11, 2009

Bank Muscat said on Thursday its exposure to troubled Saudi businesses Saad Group and Ahmad Hamad Al-Gosaibi Group and Brothers (AHAB) totals 66 million rials ($171.4 million).

"Bank Muscat has direct exposure to these groups amounting to approximately 49 million rials through our Riyadh Branch," it said in a statement on the Oman bourse website.

"One of our associates, BMI Bank, Bahrain, also has exposure to these groups, amounting to approximately 17 million rials."

The Omani lender said it was "too difficult at this stage to confirm any timelines, provisions if any we might have to take for a period of time".

Although "these groups are in default on some of their obligations, we take comfort in the fact that the groups' operating companies are profit-making and based on the last published financials, have strong balance sheets", it added.

[Saderati]

June 15, 2009



Omani banks may be exposed to troubled Saudi conglomerate Saad Group through interbank dealings, Oman's top central banker said Monday.

"We don't know. There may be interbank dealings ... but no other direct exposure," Oman Central Bank Governor and Executive President Hamoud al-Zadjali said at an Arab Monetary Fund meeting in Abu Dhabi when asked if any other Omani banks apart from Bank Muscat had exposure to the Saudi group, which is facing problems meeting some of its debt obligations.

Bank Muscat on June 11 said in a statement that its Riyadh branch had exposure of 49 million Omani rials ($127.26 million) to Saad Group and another Saudi conglomerate, Ahmad Hamad Al Gosaibi and Brothers Co (AHAB), which also defaulted on some of its payment obligations.

The bank added that its Bahraini associate BMI Bank, Bahrain, had exposure of about 17 million rials to the two groups.

"Maybe there are many banks in the Gulf and Saudi Arabia that have great exposure as this group (Saad Group) was a very large conglomerate," Zadjali said.

Standard and Poor's Ratings Service in May lowered its long and short-term counterparty credit ratings on Bahrain-based the International Banking Corp, owned by AHAB, to 'SD/SD,' or selective default, citing the lender's decision not to fulfill its obligations toward some of its bank creditors.

Al-Khobar-based Saad Group earlier this month said it had begun restructuring debt at the group and its Bahraini Awal Bank unit. Both Moody's Investors Service's and S&P subsequently withdrew their ratings due to a lack of clarity regarding Saad's operations.

[Rajiv Sekhri]

Firms risk repeat of Saad financial woes
Jun 15, 2009

The financial woes of Saudi conglomerates Saad and Al Gosaibi risk being replicated elsewhere in the Gulf region, leaving banks to cope with further bad debt on their books, analysts warned on Monday.

"Is it any wonder that you have a corporate casualty in this region?" asked an analyst who requested anonymity. "No. And it would it would not surprise me if there are more to come, maybe not of this scale."

Ahmad Hamad Al Gosaibi and Brothers Co and Saad Group made headlines two weeks ago when debt restructuring problems emerged at both companies. Their woes have raised concerns that family-owned firms in the region have been hit hard by the financial crisis.

Gosaibi is restructuring an unspecified amount of debt and has found "substantial financial irregularities" within its financial services arm. Saad sent shockwaves through the Gulf in late May when it said it planned to restructure the debt of its units hurt by a liquidity squeeze.

Analysts said on Monday a lack of transparency and disclosure in the region - the world's largest oil exporter - means more companies could have skeletons hidden in their closets.

"One issue over the next weeks and months will be about what banks had made loans to Saad and Gosaibi and what their exposure is. The other issue is which other companies, not only in Saudi, but around this region, are going to have credit problems and reveal them," said another Dubai banking analyst who also requested anonymity.

Saudi Arabia - the Arab world’s largest economy - houses many family conglomerates that started as trading and construction firms and then diversified into other industries. Most of them are private and opaque.

Saad started in 1980 and has interests in construction, engineering, real estate, tourism and medical and financial services.

Al Gosaibi is one of the kingdom's largest companies, with interests in the National Bottling Co (KSA), which bottles Pepsico beverages in Saudi Arabia, Al Gosaibi Hotel, Bahrain's the International Banking Corp (TIBC) and others. It started in the late 1940s.

SAAD'S DEFAULT ONE OF BIGGEST

Victims of the global financial crisis in the Gulf until now have been banks, including Kuwait's Investment Dar and Global Investment House. Saad's troubles represent one of the biggest defaults to hit the region since the financial crisis started last October.

Little has emerged until now about what exactly went wrong at Saad and Al Gosaibi. However, Bank Muscat, Oman's largest lender, said last week its exposure to Saad Group and Al Gosaibi totalled 66 million Omani rials ($171 million) and that it may have to make provisions.

Bank Muscat is the only Gulf bank to announce its exposure to date.

Two banking analysts said they did not think that UAE lenders were much exposed to Saad and Al Gosaibi.

"I do not think it will be a huge threat," said one analyst. "There may be some exposure but not that much."

The UAE’s central bank governor said on Monday he was concerned about local banks' exposure but added he did not expect regional family-owned conglomerates to become a major problem going forward.

Saad’s problems, for the time being, have spread from the Gulf to other parts of the world. Last week it sold 16 million shares worth $181 million in UK construction company Berkeley Group, in which it was the largest shareholder.

Saad's billionaire Chairman Maan al-Sanea, whose assets have been frozen by the country's central bank, also owns a stake in British bank HSBC.

[Cecilia Valente]

Saad investors band together for crunch meet
Jul 14, 2009
By Cecilia Valente and Frederik Richter


Investors in a $650 million Islamic bond issued by troubled Saudi conglomerate Saad plan to set up a committee to represent them at creditor meetings, a draft resolution obtained by news agency Reuters showed.

The resolution stipulates the committee will hold talks with sukuk trustees Citicorp Trustee Company Ltd, and "any other relevant party".

The document, drawn up by law firm Mayer Brown International LLP, was emailed to a large number of banks and fund managers, but it was not clear whether all of them were bondholders.

Investors in the Islamic bond Golden Belt 1 Sukuk have taken part so far in two meetings at the London office of legal firm Norton Rose to discuss the sukuk, or Islamic bond, a source familiar with the situation told the news agency.

It is common practice for bondholders to set up a committee to defend their positions ahead of a debt restructuring.

Saad was not available for comment. Both Norton Rose and Citigroup declined to comment.

Regulators and bankers alike are grappling with the fall-out from debt restructuring at Saad Group and a second conglomerate, Ahmad Hamad Al-Gosaibi and Brothers (AHAB), the biggest blow yet to hit the Gulf region since the start of the financial crisis.

Numerous Gulf Arab banks have said they face potential writedowns on loans made to the groups, and HSBC has estimated the lending exposure of Saudi banks alone at $4-$7 billion.

The Saad sukuk is scheduled to mature in 2012, paying coupons twice a year. The May 2009 coupon has already been paid, but it is not clear whether the November coupon will be paid as scheduled, a second source said.

The trustee had had "limited contact" with Saad group's legal counsel, Lawrence Graham, and received no further information to queries, according to a briefing document on the first meeting, obtained by the news agency.

The briefing document had been drawn up by a delegate at the meeting.

Yields on the sukuk rose sharply to about 27 percent from around 12 percent within ten days in March, and jumped from that level to above 70 percent in mid-June, according to Thomson Reuters data, as investors feared a default.

A number of the banks and fund managers who received the resolution -- London-based Islamic bank European Islamic Investment Bank (EIIB), German co-operative bank DZ Bank, Goldman Sachs, BlackRock Inc, CIMB, the United Arab Emirates' Mashreq Bank and the Dubai Bank - would not comment.

None of the other banks replied to a request for comment..

[fireopal]

Euro banks eye Saad's Swiss unit
Jul 25, 2009
By Tom Freke

Saudi exposure of 30 GCC banks $9.6 bln

EFG estimates int'l Saad exposure at $15 bln

Europe's banks are examining ways to reclaim funds from Saudi Arabia's Saad Group, and may take control of its Swiss subsidiary, Saad Investments, a source familiar with the situation said on Friday.

"Lenders are looking at their options, and this may include a claim on Saad's Swiss operations," the source told news agency Reuters.

Banks from outside the Gulf, including BNP Paribas and Citigroup, are owed more than $6 billion by Saad Group, which ran into difficulties in June.

Saad Group is split between a number of businesses, spread across Saudi Arabia, Bahrain, Cayman Islands and Switzerland.

The Geneva-headquartered business, Saad Investments Company Ltd (SICL), holds many of Saad's offshore investments and is registered in the Cayman Islands.

"SICL is seen to be a bit cleaner than the other parts of Saad, and its assets easier to monetise," the source said, referring to SICL's simpler debt structure.

Restructuring Saad's finances is likely to be a drawn-out process, bankers say, given the company's complexity and a legal fight that has broken out between conglomerate Ahmad Hamad Al-Gosaibi and Brothers Co (AHAB) and billionaire Maan al-Sanea, Saad's owner.

SICL had assets of $9.1 billion at the end of 2008, according to rating agency Moody's.

Shares bought by Saad include stakes in HSBC, Petra Diamonds and Imagination Tech.

A substantial stake in Berkeley Group was sold by Saad to investors in June.

SICL's main debt is a $2.815 billion syndicated loan from September 2007, Thomson Reuters LPC data show.

That loan was sold to 26 local and international banks, with those lending the most including Barclays, BNP Paribas, Credit Agricole, Citi, DBS, J.P. Morgan and Standard Chartered.

A spokesman for Saad said the group continues to make progress with its restructuring and will "make further updates accordingly".

PRIVATE DEALS

Saad's Saudi business Saad Contracting and Financial Services also secured a $2.75 billion bank loan in 2007.

That loan was not widely syndicated, indicating that most of the debt was retained by the seven banks that arranged the loan: Arab Bank Plc, BNP Paribas, Citi, Fortis, HSBC and Saudi Arabia's National Commercial Bank and Samba Financial Group.

In addition to its syndicated debt, Saad also borrowed privately from banks in the form of bilateral loans, as well as from investors in Sukuks, a form of Islamic bond.

Regional bank exposure to Saad is at least $9.6 billion, according to a Standard & Poor's survey updated on Thursday.

The agency said that only 30 percent of Saad's debt was backed by collateral, if personal guarantees are excluded.

The United Arab Emirates central bank directed banks on Thursday to take provisions over a two-year period of up to 75 percent of their exposure to Saad.