King, Latham on Saudi reshuffling milestone
King, Latham on Saudi reshuffling milestone
To assist one of Kingdom's major builders' twosome called in; as market releases to investors, contract structure likely to set instance
Azmeel Construction, one of Saudi Arabia's largest contractors, is undergoing a landmark $2 billion restructuring with King & Spalding and Latham & Watkins.
According to officials, the agreement is one of the largest restructurings to result from the introduction of insolvency laws in 2018. The law was passed to attract foreign direct investment. According to King & Spalding, which is representing Azmeel in the transaction, it promises to set a precedent for future transactions in the Kingdom.
Arab National Bank, Banque Saudi Fransi, Saudi British Bank, Bank AlJazira, Saudi National Bank, Bank Albilad, Gulf International Bank and Emirates NBD are among the creditors represented by Latham & Watkins.
According to the company's chief restructuring officer, Hisham Ashour, based on the contract, 92percent of the company's $2 billion worth of liabilities will be converted into perpetual sukuks, which are Islamic financial certificates similar to bonds. The remaining 8percent will be taken on as agreement heavy liability.
According to Ashour, this deal structure will be 'essential' for enabling the company to acquire new projects, giving lenders with the continuous liability, the chance for secondary trading, who are looking to depart their positions. This is a rare opportunity for Saudi Arabian lenders.
According to Ashour's LinkedIn post, Azmeel was first battling difficulties in 2018 due to changing market dynamics, late payments from project owners and higher costs.
The partners Nabil Issa, Michael Rainey and Zaid Hadir Al-Farisi lead King & Spalding's team in the Middle East. In addition to Mohammed Al Ammar, Jonathan Jordan, Asal Saghari, and Turki Radain, senior counsel Mohammed Al Ammar are working on the deal.
Rainey, based full time in Dubai, while Issa and Al-Farisi divide their time between their Dubai office and subsidiary offices in Riyadh. Three work for the firm's corporate, finance and investment division.
Rainey pointed out that this was a landmark transaction in regards to Saudi Arabia's financial restructuring. Since new laws governing insolvency were only implemented in 2018, there was little precedent for a restructuring of this scale and complexity. The aforementioned topics include determining classes of creditors, how to account for contingent and late claims, and how to account for contingent and late claims."
"We are extremely pleased that Azmeel's balance sheet can be improved and that the country can invest in Vision 2030 by bidding for more projects."
In the Kingdom's Future Investment Initiative, the UK's listed law firm DWF was among 44 companies that opened regional headquarters in Riyadh in 2021. Some of the companies that moved their operations to Riyadh include Unilever, Baker Hughes and Siemens, among others.
