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Middle East - Abraaj Holdings provisional liquidation update

02 August 2018
Financial Services
A brief update of the Abraaj Holdings provisional liquidation.

The following listed companies have declared their direct and/or indirect exposure to Abraaj Holdings:

  1. Air Arabia: exposure of USD 336 million;
  2. Commercial Bank of Dubai: exposure of USD 166.25 million through secured credit facilities;
  3. Emirates NBD: exposure of USD 17.6 million invested in three of Abraaj's Funds. The bank also owns a stake in Abraaj Holding Group worth USD 21.3 million;
  4. First Abu Dhabi Bank: exposure of USD 21.4 million through a secured three-year loan due to mature in April 2019;
  5. Mashreq: exposure of USD 18 million;
  6. Al Qadra Holding: exposure of USD 16.7 million in two independently managed funds, the Abraaj Infrastructure and Growth Capital Fund and the Abraaj Buyout Fund II;
  7. Shuaa Capital: exposure of USD 8.3 million through a 3.6% stake in the Abraaj Buyout Fund II;
  8. Dana Gas: exposure of USD 6 million;
  9. Oman Insurance: exposure of USD 5.5 million through the Abraaj Property Fund;
  10. Emirates Insurance: exposure of USD 2.4 million;
  11. Al Buhaira National Insurance Company: exposure of USD 2.3 million;
  12.  Ajman Bank: the bank has not granted a loan or invested in any of the Abraaj Group's investment funds. However, it has disclosed that the bank has entered into a syndication to finance Stanford Marine Company, which Abraaj Capital owns a 51% stake. The amount outstanding on the syndication is USD 28.6 million;
  13. Waha Capital: owns a 49% stake in Aqua Consortium, which the remaining 51% is owned by Abraaj; and
  14. Ithmaar Holding: holds a 1% stake in Abraaj Holdings worth USD 15 million and a 5% stake in the Abraaj Infrastructure and Growth Capital Fund.

It has also been reported by Habib Al Mulla Baker Mackenzie that an out of court settlement has been reached in relation to the criminal case brought against Arif Navqi, founder of Abraaj Holdings, concerning cheques worth USD 300 million which were dishonoured due to insufficient of funds. The case has now been dismissed at the request of the complainant, Hamid Jafar.

In the Cayman Islands, Abraaj Holdings is currently undergoing provisional liquidation. However, during the hearing held on 18 July 2018 at a Grand Court in the Cayman Islands, concern was expressed that Abraaj's attempts to sell assets and restructure had not been as successful as hoped:

“Since March, attempts have been made to sell various assets from the Abraaj Group and to restructure. On the 18th of June, when orders were made to appoint provisional liquidators of Abraaj, they were made on the basis that the company intends to make a compromise with creditors,” said Charles Falconer QC, an attorney for one of Abraaj’s creditors. “Now, their position is that ‘we don’t know whether it’s going to be possible for a compromise to be made.'"

While Colony Capital's bid to purchase some of Abraaj's funds was rejected by the provisional liquidators, Cerberus Capital Management recently withdrew its offer after not receiving enough investor support. York Capital Management is rumoured to have made a bit for USD 400 million, including USD 350 million to buy Abraaj's stakes in some of its private equity funds and the rest for the asset management platform. Lastly, the Abu Dhabi Financial Group has made a USD 55 million bid for the asset management platform.

A hearing has now been scheduled by Grand Court Justice Robin McMillan on 3 September 2018, where it will be decided whether Abraaj Holdings will be liquidated, or whether court-supervised restructuring will continue.

In the interim, the provisional liquidators will submit a report to the Grand Court and to the creditors about the efforts to sell Abraaj’s assets and about the likelihood of reaching a compromise or arrangement between Abraaj and its creditors. Much of this depends on whether the provisional liquidators can sell Abraaj’s asset-management platform.

It has been reported that over 30 lawyers were present during the 18 July 2018 hearing. 

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