Restructuring Bank Facilities in the GCC: A Playbook

Restructuring bank facilities in the GCC is a different sport from the textbook version of corporate workout. The lenders are different, the relationship norms are different, and the documentation is often patchier than what you would find in a comparable European or US workout. I have led or been close to facility restructurings with most of the major Saudi and Bahraini banks — Al Rajhi, SNB, Riyad Bank, BSF, Alinma, NBB, BBK, Ahli United among them — and the pattern of what works and what fails has become very consistent.

This playbook is what I take into the room. It is not a turnaround manifesto. It is the practical sequence I use, in the order I use it, with the documents I bring.

Step zero: know what kind of restructuring you are actually in

Before anything else, the owner and I have to agree on which of three situations we are facing. This sounds obvious. It is almost never clear at the start.

1. 01Proactive optimisation — the business is healthy, but the facility structure has grown organically and is now expensive, fragmented, or ill-suited to the operating model. Goal: better pricing, longer tenor, cleaner structure, no covenant breach.
2. 02Stress without distress — covenants are tight or already breached, but the business is fundamentally cash-generative. Goal: waiver, reset of covenants, possible extension, no haircut.
3. 03Genuine distress — the business cannot service current debt at current EBITDA. Goal: standstill, term-out, possible debt-for-equity, in extreme cases a formal protective settlement procedure under Saudi Bankruptcy Law or its Bahraini equivalent.

These three situations require completely different opening conversations. Walking into a Saudi bank's relationship manager with a 'distress' framing when you are actually in 'optimisation' will damage the relationship and your pricing for years. Walking in with an 'optimisation' framing when you are actually in genuine distress will burn whatever credibility you have left when the truth comes out three weeks later.

Step one: build the facility map before you say a word

I will not start a restructuring conversation without a facility map. It is the single most useful document in the entire process. One page, every facility across every lender, with the following columns:

• Lender and facility reference number
• Facility type — overdraft, short-term loan, LC line, LG line, term loan, Tawarruq, Murabaha, Ijara, syndicated portion
• Limit and current utilisation, separated
• Pricing — SAIBOR/SOFR plus margin, or profit rate for Islamic facilities
• Tenor and remaining maturity, with renewal date for revolving lines
• Security — corporate guarantees, personal guarantees, asset pledges, assignment of receivables, cash collateral
• Covenants — financial covenants with current headroom, plus any non-financial covenants like change of control or negative pledge
• Cross-default and cross-collateralisation linkages between facilities

When I rebuild this for a new client, the founder almost always learns something they did not know. Personal guarantees they had forgotten about. Pricing on one facility that is 150 basis points above another for no defensible reason. Cross-default clauses linking a small facility at one bank to a large facility at another. A covenant that was breached two quarters ago and never reported.

Step two: build the case the bank actually wants to read

GCC relationship managers — particularly at the Saudi banks — are not unsophisticated. But they are operating inside credit committees that have very specific reading habits. The document that gets approved is not the one with the most pages. It is the one that lets the credit committee tick the boxes they need to tick.

I prepare a restructuring memo with five sections, in this order:

1. 01Executive summary — half a page, the ask in plain language, the rationale, and what the bank gets in return.
2. 02Business overview and recent trading — two pages, focused on the audited financial track record under IFRS, the normalised EBITDA bridge, and a brief commentary on any year-on-year movements.
3. 03Forward-looking forecast — three-year P&L, balance sheet and cash flow, with a base case and a stress case. Crucially: the stress case must show that the business can still service the proposed restructured debt.
4. 04Facility ask — exactly what is being requested, exactly how it differs from the current structure, and the bank-by-bank impact if multiple lenders are involved.
5. 05Security and covenants — what we are offering on each side. Sometimes more security than current, in exchange for better terms; sometimes a covenant package that is actually tighter than what they have today, but more aligned with how the business actually behaves.

The mistake I see most often is owners going in with a forecast that is, frankly, optimistic. The credit committee will discount it by 20 to 30 percent automatically. If you build in the optimism yourself, you are negotiating against your own forecast within ten minutes of handing it over. Bring a forecast you would defend under oath, and a stress case that genuinely stresses.

Step three: sequence the lenders correctly

If you have multiple banks — and most GCC groups above SAR 100 million in revenue do — the order in which you talk to them matters more than almost anything else.

The general principle: start with the bank that has the largest exposure and the deepest relationship, agree the headline structure with them in principle, and then take that structure to the others. Two reasons. First, your lead bank's willingness to lead is itself a signal to the others. Second, if you go to a smaller lender first and they say no, that 'no' will follow you around the market within days.

There are exceptions. If one of your facilities is at a bank you genuinely want to exit — perhaps because the relationship has soured, or the pricing is uncompetitive, or you have a covenant problem that is bank-specific — you sometimes refinance that facility into your stronger relationships first, and then approach the broader restructuring from a cleaner base. I have done this several times in Bahrain, where the smaller market means relationship dynamics carry more weight than they do in Saudi Arabia.

Step four: negotiate covenants like they actually matter — because they do

Covenants are where bad restructurings are made. The pricing argument gets the attention because it is visible. But pricing is a few basis points; covenants are the difference between a facility that lets you run the business and a facility that will trip you into another restructuring conversation in 18 months.

The four covenants that come up most often, and what I push for in each:

• Net debt to EBITDA — argue for the test to be on a trailing twelve-month basis with quarterly testing, not annual; this gives you time to react. Argue for the calculation to use normalised EBITDA with specific named adjustments listed in the facility agreement.
• Debt service coverage ratio — push for inclusion of available undrawn facilities in the numerator, and for committed capex to be excluded from the denominator. The default DSCR formula in most GCC facility agreements is harsher than necessary.
• Tangible net worth — make sure the definition excludes goodwill from acquisitions and any intercompany receivables that aren't realistically collectible.
• Change of control and negative pledge — these are deal-killers for any future transaction or refinancing. Negotiate carve-outs for intra-group reorganisations and for refinancing of specifically identified facilities.

Get the headroom right too. A covenant set with 5% headroom against your base case is a covenant you will breach. I aim for 20% minimum headroom against base, and the stress case staying inside the covenants by at least a few percentage points.

Step five: documentation discipline at signing

The final stage is the most boring and the most important. Term sheets get agreed and then long-form facility documentation arrives, often drafted by the bank's external counsel, often in versions that drift from the agreed term sheet in subtle but material ways. I read every page. So should your lawyer. The places I have personally caught problems in the last five years:

• Definitions of EBITDA in long-form that quietly excluded normalisation adjustments agreed in the term sheet.
• Material adverse change clauses drafted broadly enough to give the lender effective default rights at any point.
• Mandatory prepayment triggers on insurance proceeds and asset disposals that didn't carve out reinvestment within an agreed window.
• Information undertakings requiring monthly management accounts when the term sheet had agreed quarterly.
• Conditions precedent that included documentation the client could not realistically deliver, creating a soft default at signing.

"Restructuring is won and lost in the term sheet, and policed in the long form. Owners who treat the long-form documentation as a formality after the term sheet always pay for it later."

A note on Islamic facilities

Most of my GCC clients have a mix of conventional and Shariah-compliant facilities. Restructuring Tawarruq, Murabaha, and Ijara structures has its own mechanics, particularly around how rate adjustments and tenor extensions are documented while remaining Shariah-compliant. The principles in this playbook apply equally, but the execution requires familiarity with the specific structures and the Shariah board approval process at each bank. If your fractional CFO or advisor doesn't have that experience directly, make sure they bring in someone who does — Islamic facility documentation is not a place to learn on the job.

When to start

The single most common mistake is starting too late. By the time the bank has issued a formal notice of covenant breach, or by the time a renewal is six weeks away, your leverage is gone. The right time to start a restructuring conversation is six to nine months before you need it to land — long enough to build the case, sequence the lenders, and negotiate from a position where the bank still has confidence the business is in control.

I have led restructurings ranging from SAR 40 million single-bank waivers to nine-figure multi-lender packages across Saudi Arabia and Bahrain. The work is detailed, but it is also patternable, and the upside for the business — in pricing, tenor, covenants, and the future strategic optionality the structure preserves — is usually significant. If you are looking at a renewal cycle, a covenant problem, or a facility structure that has stopped fitting the business, our Fractional Executive Services page sets out how we work alongside owners through exactly these conversations.