Family-owned group with operations in aviation, construction and retailing, had been in talks with bank creditors to renegotiate its obligations since 2011.
Abu Dhabi’s Al Jaber Group signs $4.5bn debt restructuring deal
The group did not divulge the size of the restructuring, but bankers have said it is to the tune of US$4.5 billion.
“I am pleased to announce that Al Jaber Group signed the debt restructuring agreement with its creditors,” Obaid Khaleefa Al Jaber Al Marri, Al Jaber Group’s chairman, said in a statement on the company’s website. “This is a great milestone for both the group and the banks, and is a testimony to the solid market positioning of Al Jaber Group and an outcome of its long history of its achievements in the UAE and the region.”
“Throughout the negotiations period Al Jaber Group has continued to successfully operate, winning significant new business in the UAE, the region and Asia. The finalisation of the agreement further enhances Al Jaber Group’s success and ongoing growth,” he added.
Al Jaber is one of the biggest industrial groups in the UAE, employing more than 50,000 people. Like many UAE firms that were overextended with debt, it got into financial trouble in the aftermath of the financial crisis of 2008, and in 2010 it was unable to meet some repayment terms on loans.
The negotiations were complicated by the existence of different types of debt – secured and unsecured – which increased the overall liabilities of the group.
There were also big losses related to foreign currency hedging transactions, especially relating to the Japanese yen, which fluctuated significantly at the time of the earthquake in Japan in 2011, soon after restructuring talks began.
Creditors include National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, HSBC, Royal Bank of Scotland and Union National Bank.
No one at Al Jaber Group or the creditors were able to comment or returned requests seeking comment.
A deal with creditors will allow Al Jaber to reopen credit lines and bid again for big contracts. Government contracts in the region dried up following the global financial crisis.
Last year, however, Al Jaber won a Dh1.8 billion contract to build luxury villas on Saadiyat Island in the UAE capital, an important indication that its financial condition is recovering.
The restructuring is another sign that UAE companies have put their debt issues behind them as the country’s economy rebounded last year, growing by more than 4 per cent.
Earlier this year a unit of Dubai Holding, the investment arm of Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, settled with creditors, including the Government of Dubai, over $10bn of liabilities. That has helped to boost confidence in UAE stocks, bonds and property, all of which have recovered from the years of battering after Dubai’s debt crisis in 2009.
Moody’s Investors Services, the credit rating agency, has said 2014 will be a “pivotal” year for the UAE’s financial policymakers, with some $22bn of debt maturing, including $20bn loaned to Dubai by Abu Dhabi entities at the height of the financial crisis in 2009-10.
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