Saudi Oger asks banks for stay on debt

09 November 2016

Riyadh says it will clear contractor dues by end of year

Struggling contractor Saudi Oger has asked Saudi banks to freeze repayments on about SR13bn ($3.5bn) of debt, news agency Reuters has reported.

Saudi Oger has been unable to pay billions in loan repayments to banks and salaries after severe delays in government payments.

The government intends to clear delayed payments to contractors by the end of its financial year in December.

This will allow Saudi Oger to collect more funds to meet debt obligations.

It is not yet known whether banks will accept the contractor’s request, which would pause any legal actions by creditors to recover funds. This would allow Saudi Oger to work on a restructuring deal.

A majority of the banks in Saudi Arabia are exposed to two large companies through construction finance: Saudi Oger and Saudi Binladin Group (SBG).

Lenders have a combined estimated exposure to Saudi Oger of about SR13bn. National Commercial Bank (NCB) has outstanding loans of up to SR3.5bn, Samba about SR1.5bn and Sabb about SR1bn, a banking source told MEED on 25 August.

The amount SBG owes to the banks is closer to SR25bn, according to the banker’s estimate.

Saudi Oger also owes money to workers, sub-contractors and other creditors.

Its restructuring could be the largest in the kingdom since the fallout from the 2008 global credit crunch.

The Lebanese-owned conglomerate is already working on stake sales in several subsidiaries such as Jordan’s Arab Bank and Dubai’s Oger Telecom.

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