U.S.-based Cerberus Capital Management LP made a $125 million bid to acquire Abraaj Group Ltd.'s private equity business, The Wall Street Journal said, but one of Abraaj's creditors could stall a deal after it opposed giving the group more time to restructure its debts, according to Reuters.
Abraaj said its secured creditors are set to "imminently conclude a standstill" on its debt obligations, although Kuwait's Public Institution for Social Security, an unsecured creditor, has refused to agree to the standstill, which would freeze Abraaj's estimated debt of around $1 billion for roughly 90 to 120 days, two sources told Reuters.
The Kuwaiti fund has reportedly launched liquidation proceedings against Abraaj in a Cayman Islands court, saying the firm is "substantially insolvent" and unable to repay a $100 million loan and $7 million interest.
The sale to Cerberus would need approval from all of Abraaj's lenders, including its unsecured creditors, the sources said.
Cerberus will not acquire existing liabilities of either Abraaj's private equity business or the holding company as part of the deal, thus necessitating the debt restructuring, a person familiar with the matter told the Journal. Should the sale push through, it would see Abraaj's existing commitments to investors transferred to a new company, the person said, adding that Abraaj will use proceeds from the deal to repay its investors.
Meanwhile, Abraaj has offered a deal to its lenders under which secured creditors would immediately receive a full cash payment, while payment for unsecured creditors will be delayed due to the recovery of assets at the group's holding company, one of the sources told Reuters.
