Abraaj expects secured debt deal, Kuwaiti creditor resists

DUBAI: Private equity firm Abraaj said on Monday it hoped to reach an agreement with its secured creditors, although sources said a Kuwaiti unsecured creditor was resisting, which could block the sale of its investment management.

Dubai-based Abraaj Holdings is trying to sell Abraaj Investment Management to New York-based Cerberus Capital Management as it tries to stem the fallout from allegations it embezzled investors’ money into a fund. billion dollar health care.

Abraaj, which is the largest private equity fund in the Middle East and Africa, denies any wrongdoing.

“Secured creditors are expected to enter into a moratorium imminently that will give Abraaj the ability to meet its obligations in an orderly manner,” Abraaj said in a statement after a meeting with lenders, shareholders and other parties to discuss the restructuring of the company.

Most creditors have accepted the status quo, which would see Abraaj’s debt frozen for around 90 to 120 days, two sources said, estimating Abraaj’s total debt at around $ 1 billion.

But the sources said that for the sale of its commercial investment management business to continue, Abraaj needs the support of all lenders, including unsecured creditors.

A potential obstacle to the deal emerged when the Kuwait Public Social Security Institution (PIFSS), an unsecured creditor, refused to agree to the status quo, the sources said.

A third source said Abraaj, who is advised by Houlihan Lokey HLI.N, is still in talks with unsecured lenders.

Last week, the Wall Street Journal reported that the PIFSS had filed a lawsuit in a Cayman Islands court against Abraaj, saying he was unable to repay a loan of $ 100 million and $ 7 million. interests.

Under the deal offered to lenders, secured creditors would now be paid in full in cash and unsecured creditors would have to wait for payment, with the delay due to asset recovery at the holding company level, one said. sources.

Another source said PIFSS was given 48 hours to agree to the deal and creditors expected Cerberus to be able to persuade the Kuwaitis to agree as well, as the act of failing to do so would endanger the sale and the future of Abraaj.

Cerberus, which manages more than $ 30 billion in assets, specializes in investments in distressed assets.

Kuwait’s PIFSS and Cerberus did not immediately respond to requests for comment, while Abraaj declined to comment on discussions with the Kuwaiti lender.

Abraaj faces an investigation by some of its investors, including the Bill & Melinda Gates Foundation and the lending arm of the World Bank, into how the company used some of its money in its health fund.

(Additional reports by Stanley Carvalho in Abu Dhabi and Joshua Franklin in New York; Edited by Ghaida Ghantous and Alexander Smith) (([email protected]; +971 44536787; Reuters messaging: [email protected] .report))

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