After having to cope with a series of delays and cost overruns, the $12bn Saudi Kayan petrochemicals project has managed to overcome another hurdle.

Since completing the debt raising in 2008, the project has been struggling to become profitable, been forced to raise more money and fallen behind schedule. Because of this, the date by which the project had to be up and running according to the original financing documents was missed. Technically, banks can call this a default.

Fortunately for Saudi Kayan and its principal shareholder, Saudi Basic Industries Corporation (Sabic), lenders to the project agreed to allow more time to complete the scheme. Calling a default would have been in no one’s interest. It would have caused friction with one of the kingdom’s largest companies, one which is backed by the government. It would also have caused a wave of time-consuming and damaging legal actions.

Sabic also managed to deny the banks’ request to reprice the loans at a higher interest rate in return for giving the company more time to finish building the project. For the Saudi Kayan scheme, that is good news. Taking on a further burden of higher debt servicing costs would have taken away another chunk of potential profit.

For lenders on the Saudi Kayan deal, it will have been a great disappointment. The debt was put in place in 2008 before the full impact of the financial crisis was felt. As a result, the margin on the deal is so low many banks will now be losing money on it because of a rise in their own funding costs.

Getting banks to agree to give it more time is a coup for Saudi Kayan, but it will not have pleased its lenders.