Ahmed Zayat, who operates one of North America's leading racing stables and is a major buyer at equine auctions, said Dec. 17 he is surprised that a major bank has filed suit seeking repayment of more than $34 million in loans.
"I am surprised they would take this action against one of their top clients and am considering my options," said Zayat, who operates Zayat Stables.
Zayat added that he did not understand why Fifth Third Bank would seek to call in all the loans since he has made more than $4 million toward the loans in the last 1 1/2 months.
According to the suit filed Dec. 15 in U.S. District Court by attorneys for Fifth Third Bank against Zayat, his business Zayat Stables, and Pioneer of the Nile Ltd., Zayat obtained loans totaling $38.6 million between Aug. 1, 2007, and Jan. 14, 2009. Collateral for the loans was a security interest in all of Zayat's bloodstock interests, including racehorses, stallion shares, purses earned by the stable, and any breeders' awards and stallion income, according to documents filed with the suit.
Zayat's loan was amended earlier this year to provide that in the event the owner defaulted on any of the notes, then all notes held by the bank would be considered in default and the lender could accelerate the principal balance and all accrued interest due and owing under all of the notes.
The suit states that Zayat defaulted by failing to make payments due March 1 and July 31 of this year.
According to the suit and Zayat, Zayat has paid one note in full and made a $1.3 million payment on another note. The suit concludes that after those payments by Zayat, the bank continues to suffer damages that as of Dec. 14, 2009, are in the amount of $34,265,970, plus $190,505 in accrued interest and any interest that continues to accrue, as well as attorneys fees, late charges.
An attorney for Fifth Third, Lexington-based Craig Robertson III, declined to comment on the suit or Zayat's case.
Zayat, chairman of Egyptian-based Al Ahran Beverages from 1995 to 2007 before the company was sold to Heinekin International, has had a major impact on the horse industry since he began buying horses in 2005.
Zayat Stables was the leading owner of 2008 with more than $6.8 in stable earnings. Zayat was represented by 116 winners from 740 starters that year. In 2009, Zayat Stable ranks third in earnings through Dec. 17, with $16.4 million.
Among the top horses campaigned by Zayat this year have been Pioneerof the Nile , the Santa Anita Derby (gr. I) winner and Kentucky Derby Presented by Yum! Brands (gr. I) runner-up who will enter stud at Vinery near Lexington next year, and three-time grade I winner Zensational , who is going to stud at Hill 'n' Dale Farms near Lexington in 2010. His other top runners of 2009 include grade II winners Eaton's Gift and Soul Warrior and grade III winner Heart Ashley.
In 2009. Zayat purchased 77 horses at North American auctions for a total of $24.5 million. They included 35 yearlings purchased for $14.8 million, 39 juveniles for which he paid $8.7 million, and three broodmares that cost $985,000.