Saudi Purge Claims Its Latest Corporate Victim As Kingdom Holdings Sees $1.3 Billion Bank Deal Collapse

Tyler Durden's picture

For the past couple of weeks we've written frequently about the sudden political turmoil in Saudi Arabia that resulted in two Saudi princes being killed in a span of just 24 hours and dozens others being detained on charges of corruption while having their bank accounts frozen.  Here are couple of our most recent background posts on the topic:

Now, per an exclusive report from Reuters, it appears as though the latest casualty of the Saudi shakeup is a financing deal sought by the $8 billion dollar Kingdom Holdings which is owned and run by Prince Alwaleed bin Talal...at least until he was recently arrested that is.

Kingdom Holding’s plan to borrow money to fund new investments has stalled because owner Prince Alwaleed bin Talal has been detained in Saudi Arabia’s anti-corruption crackdown, according to four banking sources familiar with the matter.

 

Kingdom 4280.SE had approached banks to obtain the loan, but the financing plan has been held up because the lenders are worried about potential repercussions if they lend to the prince’s company, the sources said.

 

One of the sources, who was approached for the loan, said it would have been worth roughly 5 billion riyals ($1.3 billion).

SA

For those who aren't familiar with the company, Kingdom Holdings is a leading Saudi investment firm with stakes in prime real estate including New York’s Plaza Hotel and London’s Savoy Hotel.

The busted bank deal apparently surfaced after Kingdom Holdings attempted to pledge an equity position it recently acquired in Banque Saudi Fransi as collateral for a new $1.3 billion loan but several banks balked until the charges levied against Prince Alwaleed bin Talal were resolved.

Kingdom completed the acquisition of a 16.2 percent stake in local lender Banque Saudi Fransi (BSF) 1050.SE in September, buying about half of France’s Credit Agricole stake in BSF for 5.76 billion riyals.

 

The company approached banks to obtain a loan that would have been secured by its BSF stake, as the company wanted to leverage the newly acquired shares in order to make new investments, according to the sources.

 

One of the four sources, a senior banker at a Saudi financial institution, said the loan deal would not go ahead until the situation facing the prince was resolved.

Of course, Kingdom Holdings is likely not the only Saudi company finding it difficult to tap debt markets these days as Moody's recently warned that a prolonged freeze of bank accounts could "damage corporate credit quality" all across the country.

Eight Saudi and international bankers, including the four sources, said in addition to the Kingdom loan, a range of other transactions involving clients who are directly or indirectly involved in the detentions had also been put on hold.

 

Banks have not reached the point of recalling existing loans, but they have increased the level of scrutiny for some new financing, the bankers said.

 

In a report last week, debt rating agency Moody’s said a prolonged freeze of bank accounts in Saudi Arabia could damage corporate credit quality in the kingdom because large depositors were often large borrowers and business owners.

 

“Saudi Arabia’s corporate sector remains dominated by unlisted family-owned businesses with uneven governance and disclosures and frequent intermingling of individual and corporate activities, which ultimately could expose corporates to these individuals’ frozen accounts,” Moody’s said.

Meanwhile, despite assurances from the Riyadh government that the economy would not suffer from the country's political turmoil "because investigators are targeting only individuals, not their companies," Kingdom Holdings shareholders don't seem to be convinced...

Kingdom

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Buckaroo Banzai's picture

Interestingly, the Las Vegas Four Seasons Hotel, which occupies the top five floors of the Mandalay Bay tower--and which is only a few floors above the notorious 32nd floor crime scene-- is partly owned by Kingdom Holdings.

idontcare's picture

... AND Prince Salman was in town at the time of the LV massacre.

idontcare's picture

So Citi couldn't help their pals?

Dubaibanker's picture

Despite the assurances of the CP and the Saudi Govt, not only the deal has stalled but the CEO of the bank being acquired was also fired, exactly 11 days after the arrests of hundreds of people in Saudi including Ministers, princes and various topmost Govt and semi Govt executives.

Banque Saudi Fransi says dismisses CEO in coordination with regulators
LetThemEatRand's picture

I recall betting a couple of posters here that Trump would continue in the long line of Isreal firsters in making SA one of Americas key allies.  I never tried to collect on the bets but I get bragging rights, and I get to call a spade a spade that no swamp drainer would willingly do business and in fact actively seek to do business with these corrupt, murderous assholes.

Nature_Boy_Wooooo's picture

Hahahahaha......you can't take my fortune..........I own Bitcoin!!!!!

Wait.......no I don't own Bitcoin, I compared that to Enron, I own gold but you took that also.

 

Sabibaby's picture

Funny google trend spike for key word "Monero" on November 18th in Saudi Arabia

silverserfer's picture

why is it whenever I see those saudi hats I want to oder a fish and chips basket?

Bloody Fkn Muppet's picture

It isn't a dishcloth, you dry your plates with a scarf.

BlindMonkey's picture

You mean random gov confiscation has consequences?  Who woulda ever seen this coming. 

fulliautomatix's picture

You only see the negative, you are such a negative person. Away with them vibes.

The people who 'plan' this stuff bet against the negative happening (if they recognise the possibility in the first place and assign a probability in the second). When they lose that bet it is only a matter of time before the consequences are costly to the extent of wiping out the investment in the 'plan'. At that point the investor who has assigned the probability walks away and leaves it to others to bear the costs. The investor who hasn't done due diligence and doesn't understand sunk costs keeps pouring money into the hole. The investor of last resort is the tax-payer - they're least informed, most liable [under law], and the dumping ground for all the failed scams.

JoseyWalesTheOutlaw's picture

Citi selected obama's cabinet...nothing to see there ....

 

 

earleflorida's picture

he should just become a ussa citizen like murdock did to buy fox!!!

... the "SKY's" is the limit?     remember 1985 that..--- from an australian to an american (zionist via israel) swaggering dueling badges of $courage$ to print his indigested misinformation

a laxativefor a great msm bowel movement?

Catahoula's picture

Warms my heart with laughter

alphasammae's picture

Fareed Zakaria CNN made his show trying to prop up Prince Waleed's image and what a great guy he was etc. and to criticize the wrong moves by Saudi Arabia

Dragon HAwk's picture

borrow money to fund new investments...  Hey lets everybody do that, what could possibly go wrong.


buzzsaw99's picture

using newly acquired bank shares as collateral.  egad that guy is possibly the worst investor of all time.

GRDguy's picture

Don't forget the William K Black book title:

"The Best Way To Rob a Bank is to Own One."

buzzsaw99's picture

his failed investment in citi belies that statement

wizteknet's picture

ant that some shit, LOL! oops had too...

Martian Moon's picture

 

Investment monies drying up?

Totally unforseeable reaction to the mass seizures of assets going on in SA

dogismycopilot's picture

I love the Trump show. 

Who needs television and Hollywood with its homos/perverts (yeah I am talking about you Kevin Spacey).

slipreedip's picture

I am shocked that the media hasnt been in uproar about all of those poor Saudi Businessmen who America has been dealing with for decades being dropped into extortion prison. IE pay and you can get out.

WOW America, please stand up for these oppressed business men you have spent decades working with.

SO disappointing.