court freezes saad investment assets, page-10

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By Souhail Karam

RIYADH, June 1 - Private Saudi firm Saad Group said on Monday it plans to restructure the debt of subsidiaries hurt by a liquidity squeeze brought on by the global financial crisis.

Earlier bankers said the Saudi central bank froze the accounts of the group's billionaire chairman, Maan al-Sanea.

The Saudi Arabian Monetary Agency issued two circulars telling Saudi banks to freeze Sanea's accounts, three Saudi-based banking sources said on condition of anonymity.

Saad Group [SAADG.UL] did not cite its chairman in a statement announcing the restructuring but said "accounts of our operating companies remain unimpaired."

The group did not disclose the size of the debt restructuring or the number of the firms affected, saying only it was facing short-term liquidity problems from global turmoil and unspecified "events" affecting the Bahraini banking sector, where it is active through two banks.

"We are continuously striving to mitigate the effects of this limited squeeze, and are also planning for an orderly restructuring of the debt of affected companies in cooperation with our counterparties and international advisers," said the firm, one of Saudi's top family conglomerates.

Saad Group said that it has appointed consultants and was also about to conclude a deal with an unnamed top European bank to manage relations with other lenders.

The accounts freeze could affect Gulf finance since Sanea and the companies he controls form a key part of the closely knit commercial world of the Arabian peninsula. Several of those companies have suffered setbacks in recent weeks.

Sanea owns Bahrain-based Awal Bank, either directly or through Saad Group, according to the bank's website, and is a shareholder in Bahrain's The International Banking Corp , according to commercial registry data.

GOSAIBI FAMILY TIES

Sanea made international headlines in 2007 when he spent 3.3 billion pounds to buy a 3.1 percent stake in HSBC . In 2008, Forbes magazine estimated his wealth at $8.1 billion.

Saad Group attributed its financial woes mainly to "the failure of companies owned by a prominent family business and the unexpected and unprecedented regional reaction to that failure." It did not name the family business in question.

It also cited "considerable payments by Group companies against facilities that, in the past, would have been rolled over or increased."

Sanea is married to a niece of Sulaiman Hamad al-Gosaibi, the recently deceased chairman of the Ahmad Hamad Al Gosaibi and Brothers Group , the bankers said. AHAB is a controlling shareholder in TIBC, which suffered a setback in May when ratings agency S&P lowered its rating to "selective default."

One banker, who spoke on condition of anonymity, said the freeze would protect collateral owned by Sanea that may be claimed by borrowers. "For SAMA, it was about defending the reputation of the kingdom, its creditworthiness," he said.

S&P said last week it was considering lowering its ratings on Saad Group due to reduced liquidity and real estate exposure.