After extensive negotiations between Ahmad Hamad Algosaibi & Brothers ("AHAB" or "the Company") and the Steering Committee "SteerCo", the Company is pleased to present an enhanced settlement proposal at a Claimants' meeting to be held in Dubai on June 2nd (the "June 2015 Proposal"). Details of the meeting will be circulated to all Claimants who have signed an NDA and submitted a notice of claim. Those Claimants wishing to attend the meeting should contact AHABADMIN@Deloitte.com.
Although further details remain to be worked out, including definitive documentation and a timeline towards implementation, a preliminary summary term sheet has been agreed between AHAB and the SteerCo that improves on the minimum recoveries offered to Claimants on May 7th last year (the "May 2014 Proposal") (assuming no litigation-based settlements/recoveries). The June 2015 Proposal also provides for higher estimated recoveries on a wide range of assumed outcomes for potential litigation-based recoveries, which could prove material:
- Under the May 2014 Proposal, Claimants would have received an initial cash payment equivalent to 10% of all outstanding claims, which AHAB intended to fund from some of the proceeds of sale of its securities portfolio. Under the June 2015 Proposal, Claimants will share the entire value of the portfolio.
- AHAB's real estate assets also play a part in the June 2015 Proposal. No longer do they just represent collateral for a minimum level of litigation-based recoveries, which was the case in the May 2014 Proposal, their full value will now remain at risk until Claimants have received an enhanced minimum recovery. The Claimants will also retain an interest in the real estate value beyond these minimum thresholds, with that interest decreasing as recoveries increase.
- The sharing of litigation-based recoveries between AHAB and the Claimants has been adjusted to incentivize the Company to maximize incremental gains across a wide range of outcomes.
- In addition, there are greater minimum recovery hurdles to be met from assets other than the securities portfolio, which put at risk not only AHAB's stake in its real estate assets but also in one of its major operating assets.
- The SteerCo believes these provisions of the June 2015 Proposal create an improved framework for Claimants, offering both an increase on minimum recoveries and a higher probability of material recoveries as compared to the May 2014 Proposal.
