Kuwaiti creditor said to refuse Abraaj deal, may prompt provisional liquidation

Abraaj founder Arif Naqvi stepped aside from investment decisions earlier this year, following allegations of the misuse of $200 million worth of funds. (Getty Images)
Updated 06 June 2018

Kuwaiti creditor said to refuse Abraaj deal, may prompt provisional liquidation

  • Refusal draws firm nearer provisional liquidation
  • Abraaj seeks standstill agreement

A Kuwaiti creditor is refusing to agree to a debt settlement deal with Abraaj, which could push the private equity firm to seek provisional liquidation, three sources close to the matter said.

The refusal by Kuwait’s Public Institution for Social Security (PIFSS) to join other creditors in a debt freeze may complicate Abraaj’s efforts to sell its investment management unit to New York-based Cerberus Capital Management, the sources told Reuters.

Abraaj, which bankers estimate has debt of about $1 billion, is already grappling with allegations that it misused investor money. The Middle East and Africa’s largest private equity firm has denied any wrongdoing.

Two sources said Abraaj had started preparations for applying for provisional liquidation, a process in which a court appoints a liquidator on a provisional basis before hearing or ruling on a petition to wind up a company.

A separate source close to Abraaj said that a provisional liquidation was not its focus and it was working on reaching a consensual deal with secured and unsecured creditors.
Abraaj said in a statement to Reuters that it was continuing to engage closely with a single creditor, which it did not name, “to reach a consensual outcome for the benefit of all parties.”

“The firm is continuing its discussions on the sale of the fund management business and talks are at an advanced stage,” Abraaj said, adding it was working with potential acquirers and other stakeholders “toward achieving a positive outcome.”

Abraaj, which is being advised by Houlihan Lokey, said it was focused on concluding a standstill agreement with creditors, saying the “vast majority” of them backed the debt deal.

Sources said the standstill agreement was needed to help facilitate the sale of its investment management business to Cerberus. But sources said PIFSS, an unsecured lender, held out and was given a 48-hour deadline to agree.

The Kuwaiti fund has since notified Abraaj that it intended to continue a winding up petition it filed through the Cayman Islands last month, the sources said. The next hearing in the process is scheduled for June 29, one of the sources said.

The Wall Street Journal reported last week that PIFSS filed a case in a Cayman Islands court against Abraaj, claiming it was unable to repay a $100 million loan and $7 million interest.

Officials at PIFSS were not immediately available for comment. Its management has previously declined to comment on an ongoing legal action.

A sale of the Kuwaiti creditor’s position to debt funds could help overcome the impasse in the process, the sources said.

A number of distressed debt buyers had emerged to potentially buy the Kuwaiti creditor’s claim, two sources said, but they said PIFSS was not willing to sell.
Cerberus, which manages assets totalling more than $30 billion, specializes in investments in distressed assets. The US company has not responded to Reuters requests for comment.

Abraaj is facing an investigation by some investors, including the Bill & Melinda Gates Foundation and the World Bank’s lending arm over how the firm used some of their money in its $1 billion health care fund.

Filipino remittances from the Middle East down 15.3% in 2018

Updated 29 min 56 sec ago

Filipino remittances from the Middle East down 15.3% in 2018

  • Cash remittances from OFWs in Saudi Arabia fell 11.1 percent last year to $2.23 billion from $2.51 billion previously
  • Personal remittances are a major driver of domestic consumption

DUBAI: Money sent home by overseas Filipino workers (OFWs) in the Middle East went down 15.3 percent to $6.62 billion in 2018 from $7.81 billion a year earlier, latest government data shows.
Lower crude prices, which affected most OFW host countries in the region, the job nationalization schemes of Gulf states and a deployment ban last year of household service workers to Kuwait were the primary reasons for the decline, a reversal from the 3.4 percent remittance growth recorded in 2017.
A government study has noted that Saudi Arabia was the leading country of destination for OFWs, with more than a quarter of Filipinos being deployed there at any given time, together with the United Arab Emirates (15.3 percent), Kuwait (6.7 percent) and Qatar (5.5 percent).
Cash remittances from OFWs in Saudi Arabia fell 11.1 percent last year to $2.23 billion from $2.51 billion a year before; down 19.9 percent to $2.03 billion in the UAE from $2.54 billion in 2017; 14.5 percent lower in Kuwait to $689.61 million from $806.48 million and 9.2 percent down in Qatar to $1 billion in 2018, from $1.1 billion a year earlier.
The Philippine government issued a deployment ban for Kuwait early last year, and lasted for five months, after a string of reported deaths and abuses on Filipino workers in the Gulf state.
OFW remittances from Oman, which implemented a job nationalization program like that of Saudi Arabia and the UAE, dove 33.8 percent to $228.74 million in 2018 from $345.41 million a year before. In Bahrain, cash sent by Filipinos rose 2.2 percent to $234.14 million last year from $229.02 million previously.
Meanwhile, overall OFW remittances grew 3 percent year-on-year to $32.2 billion, the highest annual level to date.
“The growth in personal remittances during the year was driven by remittance inflows from land-based OFs with work contracts of one year or more and remittances from both sea-based and land-based OFs with work contracts of less than one year,” the Philippine central monetary authority said.
Personal remittances are a major driver of domestic consumption and in 2018 accounted for 9.7 percent of the Philippines’ gross domestic product.