Abraaj, creditors poised to agree to stand still on debt

DUBAI: Abraaj said Monday its secured creditors are set to agree a standstill, pledging to refrain from action over outstanding debts as the embattled private-equity company seeks to stave off liquidation fears, reports foreign media.

The Dubai-based firm held talks with creditors at a meeting in the emirate’s financial centre on Monday, making a debt restructuring proposal in crucial negotiations as confidence ebbs after complaints that it mishandled investor money.

“The secured creditors are expected to imminently conclude a standstill which will provide Abraaj the ability to meet its obligations in an orderly fashion,” Abraaj said, allowing it to “move forward and resolve outstanding issues.”

Abraaj’s debt restructuring plan for more than $1bn in debt would pave the way for a sale of its fund-management business to the US’ Cerberus Capital Management, people briefed on the proposal say. Cerberus’ management briefed lenders at the Dubai meeting.

An orderly sale of Abraaj holding company assets and its stakes in the fund-management business would also be used to repay the creditors over time. But the emerging-markets private equity specialist still needs to persuade unsecured creditors, including a Kuwaiti pension fund, of the merits of its restructuring proposal, the people said.

Kuwait’s Public Institution for Social Security, or Pifss, has launched liquidation proceedings in the Cayman Islands over a default on a $100m debt. Abraaj’s secured creditors, such as Dubai’s Mashreq Bank, are expected to try to persuade Pifss to end its proceedings in order to maximise recovery and avoid a tricky liquidation, the people added.