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Sunday , November 18 2018

Kuwait public fund creditor issues position on Abraaj – Provisional liquidation likely

KUWAIT CITY, June 7, (Agencies): The Public Institution for Social Security filed a petition in the Grand Courts of Cayman Islands for the liquidation and winding up of Abraaj Holdings, which is registered in the Cayman Islands, and in accordance with provisions of the country’s Companies Laws, says a statement issued by Kuwait’s Public Institution for Social Security.

The decision to file the petition follows Abraaj Holdings’ default of a $100 million loan that was due on June 3, 2018 to the Public Institution for Social Security. The Public Institution for Social Security’s decision to file the petition stems from its responsibility to its members and pensioners. Public Institution for Social Security Director General Hamad Mishari Al Humaidhi said, “The funds invested in Abraaj Holdings belong to the hard working people of Kuwait who have entrusted us to invest their monthly savings so that they can retire comfortably when they decide to. We have a legal, fiduciary, and an ethical responsibility to see this case through till the end and return these funds, and secure the best possible outcome for our subscribers and pensioners.”

The Public Institution for Social Security’s relationship with Abraaj Holdings started in 2004 and has since developed into multiple investments and loans. In 2006 the Public Institution for Social Security invested directly in Abraaj Holdings, thus acquiring a stake in the company. By 2013, the Public Institution for Social Security’s investments in the company and loans to the company totaled $731,825,961.

The Public Institution for Social Security has since then gotten back $346,170,654. In compliance with the laws of the Cayman Islands, the Public Institution for Social Security has refrained from commenting or discussing the case publicly for seven working days from the date of court filing, which ended on June 7, 2018. Established by Amiri Decree in 1976 as an integrated system of social security, the Public Institution for Social Security is financed by contributions paid by both the insured and their employers.

The Kuwaiti creditor’s refusal to agree to a debt settlement with Abraaj could push the private equity firm to seek provisional liquidation, three sources close to the matter told Reuters. Kuwait’s Public Institution for Social Security (PIFSS) has refused to join other creditors in a debt freeze, complicating Abraaj’s efforts to sell its investment management business to New York-based Cerberus Capital Management, the sources said.

PIFSS said on Thursday that it filed a petition in the Grand Court of the Cayman Islands for the liquidation and winding up of Abraaj Holdings, which is registered there. A legal notice published in UAE daily The National, said the fund is seeking to appoint FTI consulting as liquidators. In an email to Reuters on Wednesday Abraaj said it is aware of the Cayman Islands filing and that was engaging closely with the creditor to reach a deal “for the benefit of all parties”. The Middle East and Africa’s largest private equity firm, which bankers estimate has debt of about $1 billion, is grappling with allegations that it misused investor money.

It has denied any wrongdoing. Two sources said Abraaj had begun preparing for provisional liquidation, a process in which a court appoints a liquidator on a provisional basis before a hearing or ruling on a petition to wind up a company. Abraaj, which is being advised by Houlihan Lokey, said it was focused on concluding a standstill agreement with creditors, which it said the “vast majority” backed. Sources said this was needed to enable the sale of its investment management business to Cerberus. Sources said earlier this week that PIFSS, an unsecured lender, was given a 48-hour deadline to agree. “The firm is continuing its discussions on the sale of the fund management business and talks are at an advanced stage,” Abraaj said on Wednesday, adding that it was working with potential acquirers and other stakeholders.

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