DUBAI - Abu Dhabi-based Al Jaber Group has agreed restructuring terms for 5.9 billion dirhams ($1.61 billion) in debt, sources familiar with the matter said, potentially ending a long-running dispute with its creditors.
Under the deal likely to be implemented by the end of March, Al Jaber will reduce debt throught asset sales and a discounted debt buyback mechanism. It will also appoint a new board.
The company did not immediately respond to a request for comment.
Al Jaber, best known as a contractor but with interests across a range of sectors, has struggled since a construction downturn in the United Arab Emirates after the global financial crisis.
The company began talks with creditors in 2011 after building up debt to expand beyond construction work.
Al Jaber agreed last week to the main terms of a new restructuring plan with a group of creditors including Abu Dhabi banks and some hedge funds, the sources said.
The company agreed to sell operating companies, some of its investment portfolio and shareholder assets such as the Shangri-La hotels in Dubai and Abu Dhabi, the sources said.
It will use 1.3 billion dirhams of group net asset sale proceeds and an expected 750 million dirhams of shareholders’ net asset sale proceeds to repay debt through a discounted debt buyback mechanism, they said.
The company has also agreed to name a new board with two independent members, a chief restructuring officer and a member of the Al Jaber family as chairman.
Creditors will extend the term of the 5.9 billion dirhams loan, which matured last March, by eight years, setting a final maturity at the end of 2026, with a two-year grace period on interest payments, the sources said.
Interest will be cut to 250 basis points (bps) over Libor from 400 bps, they added.
Lenders will provide a 1.5 billion dirham syndicated bonding facility, a sort of revolving loan that will become available in tranches as debt is repaid, the sources said.
The deal follows an earlier $4.5 billion debt restructuring in June 2014. Al Jaber missed a debt repayment in March 2016.
($1 = 3.6728 UAE dirham)
(Reporting by Davide Barbuscia Editing by Edmund Blair) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: firstname.lastname@example.org))