Saudi Binladin Group (SBG), the biggest contractor in kingdom by turnover, has secured a SR2.5bn ($667m) loan from banks in the kingdom, which will ease financial pressure on the embattled contractor.

Arab National Bank (ANB) and Saudi British Bank (Sabb) have arranged the loan for SGB, according to news agency Reuters, which cited banking sources familiar with the matter.

MEED on 8 May reported that SBG had agreed the terms of the loans with both these banks and the deal was expected to be signed shortly. The company, which has laid off 70,000 of its workforce in recent months, is primarily using the funds to clear the end of service dues and boost cash reserves to regularise delayed salaries of the employees, banking sources told MEED.

SBG had originally approached banks in early April to secure SR5bn in cash by pledging its properties in Mecca and Jeddah as a security against the financing facility. However, only a small group of lenders have agreed to extend the SR2.5bn debt, the sources said.

The assets pledged by the SBG are valued between SR7bn to SR9bn, source added.

“By taking about 250 per cent coverage on the loan, the banks are securitising their exposure to SBG,’’ one Riyadh-based banker said. Banks are mostly exposed to SBG through project and construction finance and collateral on this loan will give them additional security from SBG, reducing their risk on overall SBG receivables, the banker adds.

A spokesman of SBG declined to comment on the transaction.

Signing of loan facility is another sign of relief for the SBG, one of the oldest and the largest contracting firms in the region. The company, which has mainly relied on multibillion-dollar state contracting for business, ran into financial difficulties and laid off workers to cut cost as the government stopped payments for the work it has done on several projects. The company was barred from competing for new business in the kingdom following a crane accident late in 2015, which claimed more than 100 lives in holy city of Mecca.

The ban was lifted earlier this month through a royal decree, and the government ministries have slowly started releasing delayed payments.