Dubai Loses Court Challenge to Oaktree Over Almatis

Date: Wednesday, April 14, 2010
Author: Bloomberg

A Dutch court ruled against Dubai International Capital LLC’s petition to prevent Oaktree Capital Management LLC from seizing its Almatis unit in a debt restructuring.

Dubai International, the fund owned by Dubai’s ruler, appealed last month to Amsterdam’s Enterprise Chamber to prevent managing boards of the Frankfurt-based alumina-products maker from implementing U.S. Chapter 11 bankruptcy proceedings to restructure about $1 billion of loans.

The Dutch court ruled that “there are no grounds for Dubai International’s s request to grant injunctive relief,” Almatis said in a statement yesterday.

Dubai International said today it will continue to seek a refinancing of Almatis’s debt on its own terms. The United Arab Emirates-based private equity fund bought Almatis for an undisclosed amount in 2007. The fund is seeking to retain its controlling stake in Almatis by honoring in full about $660 million of senior debt, and handing junior lenders equity in return for cancelling their loans.

Almatis breached its debt terms last year as the global economic slowdown hurt demand for its products. Los Angeles- based Oaktree, the biggest senior lender, rallied support in July for a takeover after the debt breach. Lenders to a company that violates loan conditions can demand immediate repayment.

‘True Value’

Dubai International said its proposal “more accurately and fairly reflects the true value of the business,” according to a statement sent to Bloomberg.

Two-thirds of senior lenders to Almatis in March have already voted in favor of Oaktree’s proposal to take over the company in exchange for writing down more than half its debt. Oaktree’s plan would cut Almatis’s debt to about $420 million and put the company under Chapter 11 protection.

The Dutch court’s decision doesn’t hamper Dubai International’s pursuit of an alternative restructuring plan, the fund said. “If Almatis commences proceedings under Chapter 11 in the U.S., we expect that the reorganization plan currently contemplated by Almatis and Oaktree will be strongly contested,” according to Dubai International.