Thursday, April 29, 2010

Blue City Update - The Bahraini's are back. AAJH just won't go away...

OK. About time for another serious post.

Before that, a Dragon pat on the head for the Omani press lately - Muscat Daily, Times of Oman & stalwart print-teenager Y Magazine all doing much better lately with publishing more real stories. Mainly focused on social issues, fair enough, but it's a start. Keep it up. And the 123 Orion gig tonight is SOLD OUT. I'll publish a report of how it went after the weekend. Wish I could have attended myself, but must instead complete a quick trip to Europe now the ash is clearing. (Those Swiss elves need feeding...)

So, what of Blue City?

Well, the contractors have been kicked out. Saleh Miri, the CEO, has 'resigned' and leaves at the end of July. The team recently found a couple of hundred million dollars under the sofa left over from the bonds and are using it to pay themselves off as they all look for work elsewhere.

The recent press announcement from AAJH, the Bahraini company who originated Blue City, was a bolt from the blue, as it were. Anees and his partner used their contacts to ensure it wasn't reported in any of the Omani papers, but Ahmed Janahi (the AAJ of AAJH) had a press conference last week about how they are heading back to Al Sawadi to rescue the project, cavalry style, armed with their original 70% shareholding, a boat-load of Qatari cash, and a seriously high powered politico-lawyer: former Qatari Justice minister Dr. Najeeb.

Dr Najeeb is no pussy folks. He's the guy Saddam Hussein chose to be his lawyer. He is more than aware that the Oman court decisions against AAJH are totally flawed. Local company, and originally 30% partners in Blue City, Cyclone LLC, locked out AAJH once they had obtained the $900 million in bond money.

Photo: Here come the Cavalry. Last week AAJH announce their intention to rescue Blue City...

The 50/50 shareholders of Cyclone are, of course, HRH Sayed Haitham Bin Tariq Al-Said and (no surprise here) one Mr. Anees Issa Mohamed Al-Zedjali, Chairman of ASIT (the holding company)& BCC1 (the phase 1 development company), erstwhile newspaper editor (The Times of Oman is owned and run by his Dad, Sh. Essa Al Zedjali) and blond marketing-talent spotter par excellence...

The Oman Supreme court are still to rule (due next month) on the Omani Court of Appeal's dubious decision reconfirming that AAJH did own 70% of the original Blue City company, but that a technicality meant they couldn't own it and they should be paid off at cost by Cyclone for the shares they didn't actually own to start with. Or something. (It's hard to parse their completely logically inconsistent court ruling. Sorry).

But now that AAJH have the good Dr. Najeeb on board, the Omani courts are in deep shit, IMHO. It's like riding into the tumbleweed strewn town with the legal equivalent of Clint Eastwood covering your back.

The hope is that Cyclone's super-wasta'd up 50% owner, HRH Sayed Haitham (the Sultan's nephew cousin (thx) and and Minister of Culture - that's where the essentially almost free land came from, his far too indulgent Uncle cousin), will realise that 30% of something good, along with a restored project due to the Qatari investors, is a hell of a lot better than 100% of a bankrupt $1 Billion international embarrassment. Whether he's smart enough to realise why the project went tits-up to start with, and has the balls to cut loose his incompetent business partner, is a more interesting question.

So, AAJH is back, and he's making a pretty strong play. It's going to be interesting to see how it ends up.

Also of interest is what the fate will be of the secret 'extra' 7km2 of primo beach front Blue City property that was part of the original almost gift from HM to the first Blue City Holding Company OASIS, but was NOT required to secure the mortgage on the class A bonds and is not part of the original Blue City Master Plan. The officially independently certified land valuation used to underpin the bonds when they were issued, secured on the remaining 25km2 of land for Blue City phases 1, 2, 3, 4 ++, was.... $3.5 Billion.

Hmmm. Even allowing a 50% discount post-real estate crash, not uplifting for the more valuable back front location, and allowing another 50% wastage for roads, utilities and lakes, that's still a sweet $250 million worth of real estate.

No wonder Anees wasn't too worried that his bond holders lost their shirts and the project was driven (with him at the wheel) into bankruptcy. He was still looking at half of that, no matter what, as long as the judges did what they were told.

I also wonder if HRH ever tells his Uncle how things are going with that land he was essentially given to create a new city for 250,000 people...

MANAMA: Qatari investment company Bin Muhanna Holding Group yesterday announced its participation as a main partner in the major Blue City project being set up in Oman by the UDM Group and Bahrain-based A A J Holding.

Bin Muhanna Holding chairman Dr. Najeeb bin Mohammed Al Noaimi said the firm were happy at becoming part of the major project. "We will now approach international banks, investors and insurance companies in order to restore confidence in this project, which has been facing obstacles and hindrances, and realise its objectives.

"We will also co-operate with all the partners, particularly A A J Holding, which started the project in 2004."

He said the company will work closely with all investment and financial centres to revive the project and realise its development objectives.

He said the project has faced major setbacks and obstacles, which were created by some investors, and this has reflected adversely on its reputation.

"We will now rise to the occasion of this partnership, and we will provide financial and legal assistance through our long experience in this field to develop the project and reach positive results."

A A J Holding president Ahmed Abu Baker Janahi said the company is proud of this partnership which comes at a time when the project needs investors who have financial and legal leverage. "This initiative will be a qualitative step and a much needed addition to the project that will enable it to overcome the obstacles and hindrances which have obstructed its development and affected its reputation on a global level," he said.

"We will also invite every sincere person or party wishing to develop the project and we hope that all other investors will serve the project's high interests and the interests of all local, regional and global partners who are keen for the success of the project, particularly when its failure will affect the investment climate in the entire region," he added.


  1. wow Dragon.

    Why does HM not know about this stuff? I dont think this coruption is making him happy.

    Ali AK

  2. Correction: HRH is HM's cousin and not nephew.

  3. Hello - ever the dreamers ever questioned where their 250 thousand residents are going to come from? A wonderful example of truly unsustainable urban sprawl!

  4. thats such an interesting phrase
    "We will also co-operate with all the partners,
    particularly A A J Holding, which started the project in 2004."

  5. HRH Sayed Haitham (the Sultan's nephew!!!)
    who was/is the sultans brother?

  6. No comment on the article but one nitpick: Sayyid Haitham is the Sultan's cousin, not nephew.

    -Omani in US

  7. Dragon,

    Very Strong article!!!

    I am sorry to say that it is so unfortunate to see this happening in Oman.. A country that is so proud of its legal system and HM Sultan Qaboos is known to be a fair person.

    Whatever is happening, is only putting a big question mark on the country's foreign investments and the fate of any person coming and investing in Oman!!

    It is clear that the Bahraini party is here to make money as well but they would of built something along the way!!! and I am sure if they were given the chance to manage the project all of this wouldn't of happened!!

    I think it is time that the Bond holders put their hands with the Bahraini's to revive the project and to fix what our News Editor and our Spoiled Cousin have F***-up.. at least they are intelligent enough and have the track record and experience as obvious with their previous projects within Bahrain (Bahrain Financial Harbour, Marina West, etc.)..

  8. ... And a hard rain fell.

    Kudos to all at AAJ et al for sticking with it.

    The truth will out.

    On, on.

    Willie D.

  9. Check out the Muscat daily and the Times of Oman this sunday where a senior member of the Royal family has a public go at the Ministry of Manpower. Powerful stuff.

  10. BREAKING NEWS: Vitamin W proven to be just a placebo.


  11. "He was still looking at half of that, no matter what, as long as the judges did what they were told".

    UD you will be inviting wrath of courts. The above sentence can be construed as "contempt of courts" in any legal system.

  12. Very, very interesting...

  13. Legal system in Oman and courts are out of date and out of wack is all I can say

  14. Dear UD,

    Your blog is hugely popular. Your accurate and authentic information is sincerely appreciated. Let me add some more data on the blue city project. Hopefully those maroons who messed should wake up. Its about time His Majesty Qaboos asks Anees to shut up and get out of the project. Enough of wasta boss.

    Issuer = Blue City Investment 1 Limited (Commercial Registration No. WK163178) incorporated in Cayman Islands for the purpose of issuing Class A, B, C & D Notes worth US$ 925 Million. Borrower = Blue City Company 1 SAOC (Commercial Registration No. 1/83627/7) incorporated in Oman.

    On 7th November 2006 Blue City 1 SAOC signed Intercompany Loan Agreement and received US$ 921,400,960 as follows: Class A1/Class A2/Class A3/Class A4 – 658,982,625; Class B – 142,200,630; Class C – 50,217,705 and Class D – 70,000,000.

    There were many PARTIES to the transaction. Namely, (1) The Bank of New York as Offshore Security Trustee (2) Bank Muscat SAOG as Onshore Security Trustee (3) Bear Stearns Bank Plc as Class A guarantor (4) The Bank of New York as Offshore Account bank (5) Bank Muscat SAOG as Onshore Account bank. Bear, Stearns International Limited were the arranger and Oppenheimer (Samuel Grossmann) as the brokers. Clifford Chance drafted all agreements and Iain Morpeth is the man in-charge. The Intercompany Loan agreement contains a number of representations, covenants and events of default which are subject to a Material Adverse Effect qualification. Project documents specified are: Development agreement, Construction contract, construction security, construction contract guarantee, land transfer agreements, Works agreement, Balance of Work agreement, Additional Works Agreement, etc. Government of Oman represented by its ministers (Tourism, National Economy and Commerce & Industry) have signed & ratified agreements, why are these ministries keeping silent? If the SEC (Securities and Exchange Commission of the USA) can take on Goldman Sachs for fraud, why spare Blue City? US$ 50 Million was held in the Blue City 1 SAOC’s Bank Muscat account as escrow, where is that money? US$ 20 Million was escrowed for the purchase of Al Sawadi Beach Resort Hotel and of the associated usufruct, where is that money? Blocked escrowed for the company was US$ 105,417,358, where is this money? US$ 440,588,374 was the total initial mandatory deposit that was made with the issuer (Blue City Investment 1 Limited, Cayman Island). Where is the audited financials for Blue City 1 SAOC and Blue City Investment 1 Limited???

    Can somebody from Blue City 1 SAOC answer?

  15. I honestly wonder if anyone from Blue City reads this blog!! if they do its either they don't have an answer "lies" or they are too ashamed of them selves... I wonder if HM knows that his cousin is that corrupted?! and his actions are effecting our beloved country.. I am so ashamed of what they have done and whats worse is our courts.. what a disgrace

  16. justcurious - how can UD be in contempt of court without actually being in court? Muppet.


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