A group of regional and local lenders are preparing to give the Saudi Binladin Group (SBG) an extension of up to two years on a SR10bn ($2.7bn) shariah-compliant facility, secured for construction work on the Grand Mosque in Mecca.
The contractor has put in a formal request to extend the payment date until the end of 2019 of the syndicated loan, which was used as working capital to fund the expansion of the Grand Mosque, according to banking sources.
The facility was due to mature in 2017, but SBG has asked he banks to extend it to match the completion date of the project, which has also been delayed.
They are asking for two year extension and they have formally requested, according to a banking source.
There are 10 to 12 banks involved in the syndication including Dubai Islamic Bank, National Bank of Abu Dhabi, Noor, Ajman Bank, Union National Bank and Mashreq among others, the source said adding that most banks have agreed and the papers working is being done.
The banks will get the money back eventually and this is what it is, he said.
Several projects in the kingdom have faced delays as Riyadh cut spending and reviewed future and ongoing development in the wake of a fall in the oil prices. SBG, one of the biggest contracting firm in Saudi Arabia by turnover, had to shed thousands of jobs last year to control costs and ease cash flow issues after the government held payments to the contractors.
SBG also had to face penalties and was suspended from winning new work in the kingdom after a crane accident at the Grand Mosque resulted in loss of more than 100 lives in September 2015. Work was temporarily suspended on the project but worked resumed after Riyadh completed an investigation into the accident and subsequently lifted the work ban on SBG.
Reports citing Meccas mayor Osama bin Fadl al-Bar said that the expansion project is expected to be completed either this year or next. The loan facility being negotiated for extension could have an early settlement clause, meaning if SBG receive payments from the government before 2019, it would pay the creditors.
The contractor in May last year also secured a $667m loan from banks in the kingdom to ease presser on its financials Arab National Bank (ANB) and Saudi British Bank (Sabb) arranged the loan.