Saudi Arabia’s Jabal Omar Development Company is due to close a SR1.35bn ($360m) bridge loan by mid-April, after the deal has been held up for several months by conditions set out by the banks.

The deal, originally announced in September 2010, will put in place interim funding before a much larger facility, that could be more than SR5bn, is arranged later in the year.

The banks have refused to handover the full amount of the loan until Jabal Omar met a series of conditions. These include the transfer of construction contracts on the scheme from a cost plus deal, which covers the contractor’s expenses plus an agreed profit, to a lump sum deal, where the contractor is paid a fixed sum upon delivery.

The demand from the banks that Jabal Omar agrees better terms with its contractors resulted in Saudi Binladin leaving the project, to be replaced by the local Nesma & Partners Construction.

“There are just some final Sharia approvals to be received and then we should be able to complete the financing. The biggest hold-up to the financing was going through the new construction contracts,” says a source close to the bridge loan.

The SR1.35bn loan will be provided by a group of five banks, including Al-Rajhi (which is also acting as financial adviser to Jabal Omar), National Commercial Bank, Bank Aljazira, Saudi British Bank, and Saudi Hollandi Bank.

Jabal Omar announced in March that its first quarter loss fell 17 per cent to SR7.4m ($2m).