Saudi Saad Group pushes ahead with restructuring

CAIRO — A privately held Saudi Arabian conglomerate facing stiff financial troubles because of defaults has denied reports its accounts in Kuwait were frozen, and said it was pushing ahead with debt restructuring plans.

Saad Group, headed by billionaire and major HSBC stakeholder Maan al-Sanea, said it will soon announce its proposal for a coordinating bank and four accounting firms to spearhead the restructuring process. That effort came after bankers in Saudi Arabia said the country’s central bank ordered al-Sanea’s accounts and those of five relatives frozen.

The moves have fueled concerns that Saad’s problems may merely be the first to be publicly aired among a number of large, but secretive, family-held businesses in an oil-rich kingdom that has prided itself on skirting the worst of the global economic meltdown.

Late last week, a Kuwaiti newspaper said the Kuwaiti central bank had frozen Saad Group’s accounts, as well as those of another Saudi firm, because of $750 million in debts.

But Saad denied the report, saying in a statement e-mailed late Sunday that the claim was “untrue” and that the rumors circulating about the company “stem from the circumstances of a private family issue.”

A Saad spokesman in London on Monday declined to elaborate on the nature of that issue, and reiterated that the company’s accounts in Saudi Arabia are stable.

“Saad is working toward a resolution of this matter, which it hopes can be achieved, and is grateful for the efforts of a group of prominent businessmen who, supported by the authorities, are likewise working to find a swift and positive outcome,” the company said in the statement.

Saad’s problems came bubbling to the surface late last month after bankers in the country said the Saudi Arabian Monetary Authority ordered a freeze on al-Sanea’s accounts, as well as those of his wife and four other relatives. The central bank did not explain the decision, which was sent directly to financial institutions in the country. Al-Sanea, who was listed in March by Forbes as the world’s 62nd richest individual with assets of about $7 billion, holds a roughly 3 percent stake in HSBC.

The announcement triggered an avalanche of woes for the company. Its ratings were downgraded to junk status by several debt rating agencies, and then withdrawn altogether, with two agencies saying they felt they lacked sufficient information to issue ratings.

Saad, which had assets of $30 billion by the end of 2008 and interests in real estate, hospitals, banks and construction both in and outside of Saudi Arabia, has declined to comment on SAMA’s action.

It said last week it was dealing with a “short-term liquidity squeeze” tied to a broader credit crunch domestically and abroad. It also attributed its difficulties to the confluence of several factors, including the “failure of companies owned by a prominent Saudi family business and the unexpected and unprecedented regional reaction to that failure.”

Saad did not name the company, but some media reports had linked the freezing of al-Sanea’s accounts to possible ties with Ahmad Hamad Algosaibi and Brothers Company, another prominent Saudi conglomerate that owns Bahrain-based The International Banking Co. TIBC recently defaulted on some of its debt and some reports said al-Sanea was the bank’s chairman.

Saad has denied that link.

Al-Sanea is married to the daughter of Algosaibi’s founder.

In dealing with the debt issues, Saad said it had appointed Lawrence Graham LLP as its international legal advisers, and BDO Corporate Finance as its financial advisers.

In its statement Sunday, it said the appointment of the coordinating bank and accounting firms would be “subject to the formal approval of counterparties.”