Cerberus Capital Management on Monday provided $125 million to purchase the private-equity enterprise of embattled Abraaj Group of Dubai, individuals accustomed to the matter stated, amid a struggle with collectors over Abraaj’s debt-restructuring plan.
Abraaj’s executives are pinning their hopes on the Cerberus bid to convey stability whereas it really works out monetary obligations with collectors spooked by questions raised about its monetary practices. Once one of many prime private-equity gamers within the Middle East’s nascent monetary group, Abraaj has misplaced a lot of its senior management and has closed down funds this yr throughout a dispute with buyers together with the Bill and Melinda Gates Foundation, a unit of the World Bank and Kuwait’s nationwide pension fund.
Abraaj held a gathering in Dubai with buyers, collectors and others on Monday, saying in a information launch later that a proposed sale was mentioned. The launch did not identify Cerberus, which is predicated in New York.
If a sale to Cerberus went by way of, it will contain present investor commitments being transferred to a brand new firm, an individual acquainted with the matter stated. At the identical time, Cerberus would not tackle any of the prevailing liabilities of both the fund administration enterprise or Abraaj’s holding firm, the individual added.
An Abraaj spokesman declined to touch upon the small print of any deal.
Any sale would wish the approval of all of its collectors, and it is not clear that the agency would get their help. It would go away Abraaj with a holding firm that few know a lot about.
The Kuwait Public Institution for Social Security is making an attempt to pressure Abraaj into chapter 11 in a Cayman Islands courtroom. The Kuwaiti fund alleges that Abraaj cannot repay a $100 million mortgage and $7 million curiosity, in accordance to a courtroom doc seen by The Wall Street Journal.
The individual stated the Kuwait fund additionally would not go together with different collectors in giving Abraaj extra time to restructure its money owed — an settlement generally known as a debt standstill.
Abraaj stated its secured collectors — which have a tendency to be banks or asset-based lenders — had agreed to the debt standstill.
“We are pleased with the outcome of today’s meeting and the constructive support we have received from our secured creditors in enabling us to move forward and resolve outstanding issues,” Abraaj stated within the launch.
Abraaj’s troubles started earlier this yr when buyers in its $1 billion health-care fund, together with the Gates Foundation and the World Bank, alleged the agency used their cash to finance its enterprise slightly than for hospitals and clinics in Africa and Asia, The Wall Street Journal has reported. The firm has since acknowledged shifting a minimum of $200 million out of a separate $1.6 billion fund.
Proceeds from a sale of the private-equity enterprise can be used to pay again buyers within the buyout fund, an individual acquainted with the matter stated.
The troubles have pressured Abraaj’s founder Arif Naqvi to step again from operating the agency day-to-day.
Cerberus seems to have gained the sting over Colony NorthStar, which had earlier held talks with Abraaj about shopping for its fund administration enterprise, in accordance to individuals conversant in the matter.
Monday’s assembly was held on the Dubai workplaces of regulation agency Allen & Overy, one of many authorized advisers concerned with Abraaj. Creditors, legal professionals, advisers and the co-chief executives of Abraaj’s personal fairness enterprise, Omar Lodhi and Selcuk Yorgancioglu, all attended the gathering, which lasted a lot of the day.
Investment financial institution Houlihan Lokey is appearing as adviser to Abraaj.
Cerberus, which counts former U.S. Vice President Dan Quayle because the chairman of Cerberus Global Investments, has over $30 million in belongings underneath administration, in accordance to its web site. It made its identify shopping for distressed corporations and promoting them for a revenue.
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