Bahrain-based investment firm Arcapita Bank has filed for bankruptcy protection after failing to secure a refinancing on its $1.1 billion credit facility.
The firm, which invests in private equity, infrastructure, venture capital and real estate, filed voluntary cases in the U.S. under Chapter 11 with the aim of "developing and confirming a plan of reorganization," it said in a statement today. The filings will allow the company to implement a restructuring and impose a worldwide injunction against collection and enforcement actions against it.
The firm said that none of its operating subsidiaries or portfolio companies, which include German PVC window and door profile maker Profine and French logistics group Compagnie Europeenne de Prestations Logistiques, were included in the filing.
The firm was forced to file for bankruptcy protection as it risked being unable to refinance a $1.1 billion financing facility by a March 28 deadline due to the euro-zone crisis and some creditors in the group, including a London-based hedge fund. The hedge fund refused to be on a creditor committee, chaired by Royal Bank of Scotland Group (RBS) and including four other banks as well as U.S. hedge fund Davidson Kempner Capital Management. The London-based creditor displayed more aggressive tactics, people familiar with the matter told Dow Jones Newswires last week.
Atif Abdulmalik, chief executive of Arcapita, said: "This was a difficult decision. But after lengthy review of all the alternatives open to us, there is no question that this is the right course of action, which we are taking with the support of the board."
He added: "We have sufficient liquidity to manage our business and are fully focused on minimizing disruption to our investment portfolio, which Arcapita's professionals will continue to manage on behalf of our investors. Asset sales will only be carried out at a time we consider to be the appropriate point in the investment cycle."
Arcapita Bank recorded a net income of $50.2 million, marking a return to profitability for the bank as at June 30, 2011, according to a separate company statement.
It has been an active Middle Eastern investor. As of June 30, 2010, the bank had completed 71 transactions with a transaction value of over $28 billion across private equity, real estate, infrastructure and venture capital. The bank's balance sheet included over $4 billion in equity investments and $400 million in financing investments.
Arcapita operates out of four offices in Bahrain, Atlanta, London and Singapore. The bank has paid-in capital of $311 million, of which 70% is held by over 300 prominent individuals and institutions mostly from the Arabian Gulf region, and the remaining 30% is held by Arcapita's management.
Arcapita's legal advisors are Gibson Dunn & Crutcher and Linklaters, and its financial adviser is Rothschild.