Dubai-based company Abraaj wins court order for restructuring

Dubai - In parallel, the court also appointed representatives of Deloitte as JPLs of Abraaj Investment Management Limited (AIML).

Embattled buy-out firm Abraaj said on Tuesday that it has won court approval for a provisional liquidation of its business, enabling a court-supervised restructuring and protection of stakeholders' rights. 
On Monday, the Grand Court of the Cayman Islands appointed representatives of PricewaterhouseCoopers as joint provisional liquidators (JPLs)of the Abraaj Holdings (AH), the Middle East's biggest private equity firm.
In parallel, the court also appointed representatives of Deloitte as JPLs of Abraaj Investment Management Limited (AIML).
"Subject to the final sealed order of the Cayman Court, this ensures that the rights of all stakeholders can be protected while the company and the JPLs promote a consensual restructuring of the company's obligations," the debt-ridden equity firm said in a statement.
As per the court order, Simon Conway of PwC Corporate Finance and Recovery (Cayman) Limited and Michael Jervis and Mohammed Farzadi of PricewaterhouseCoopers, will be JPLs of AH, while David Soden and Stuart Sybersma of Deloitte will be JPLs of AIML.
"The appointment of provisional liquidators imposes a moratorium on the enforcement of all unsecured claims against the company, allowing time for a proposal to be put to creditors for the orderly restructuring of the company," Abraaj, one of the world's largest emerging markets private equity firm, said in a statement.
"The decisions made by the court now enable AH and AIML to independently pursue court-supervised restructuring plans in an orderly fashion and for the benefit of their respective creditors. The court-supervised restructuring of AH will have minimum impact on the day-to-day operations of the management of the Funds and their portfolio companies," said the Dubai-based Abraaj.
Abraaj also said that pursuant to the court order, the JPLs for AH are "authorised to take all necessary steps with a view to develop and propose, in consultation with the company and its advisors, a restructuring of the company's obligations. The order grants extensive powers to the JPLs for the protection and management of the company's assets, including maintaining oversight of board and management activities to maximise the returns to the stakeholders."
Abraaj, founded by Arif Naqvi with $60 million in 2002, had filed for liquidation in a move is to thwart separate legal action by the Kuwait Public Institution for Social Security and another creditor, who are seeking the liquidation and winding up of the firm for non-payment of debt.
"We are pleased with this outcome and grateful to the court for its careful consideration of the issues and positive judgment. This order validates the position consistently maintained by Abraaj that an orderly restructuring, under the guidance of a highly experienced team of Joint Provisional Liquidators, can ensure the outcomes we seek for the Company and its creditors. We are wholly committed to supporting the JPLs through this process and ensuring stability and value maximisation for all parties," said Naqvi.
Abraaj, which had grown phenomenally in 15 years into an emerging market champion with assets of $13.6 billion at its peak, has also been trying to stem the fallout from a row with four of its investors, including the Bill & Melinda Gates Foundation and International Finance Corp, over how it used their money in a $1 billion healthcare fund.
A worsening liquidity crisis has triggered defaults, pushing Abraaj to seek the court protection against creditors after a Kuwaiti pension fund sought a petition to wind up Abraaj for non-payment of a $100 million debt.
Auctus Fund, another creditor to Abraaj had also filed legal action in the Cayman over $100 million of debts, and had called for the appointment of Grant Thornton as independent provisional liquidator to carry out a full audit of the troubled equity firm ahead of the court hearing in the Cayman Islands.
Earlier this month, Abraaj met its creditors to reach a standstill deal, which the firm said was backed by the vast majority of its lenders, to facilitate the sale of its investment management business to Cerberus. However the Kuwaiti fund refused to join secured creditors in the proposed debt freeze agreement
Reportedly, a unit of Abu Dhabi Financial Group has made a conditional offer to buy private equity firm Abraaj's investment management business for $50 million.
According to Reuters, the offer from Abu Dhabi Capital Management is well below the $125 million offered by New York-based private equity firm Cerberus Capital Management before Abraaj filed for provisional liquidation last week.
issacjohn@khaleejtimes.com