SBG asks for further extension on Islamic loan

21 September 2016

The company had first asked banks to give it extension on repayments at the end of August

Saudi Binladin Group (SBG), one of the biggest contractors in Saudi Arabia, has requested a second extension on its SR817m ($217.9m) shariah-complaint loan facility used to fund the construction at the kingdom’s Grand Mosque.

The loan was originally due to mature on 15 July, however, the contractor has engaged the lenders for a further delay in repayment after it did not receive the full amount owed by the Saudi government for the construction it has finished, news agency Reuters cited sources as saying. The company had previously requested an extension at the end of August.

The government has paid SBG a small portion of the amount it says it is owed for the Grand Mosque project before the Eid al-Adha this month but a large portion still outstanding.

The Binladin Group could not be reached for comment while the Saudi Ministry of Finance declined to comment to the news agency.

SBG which had traditionally relied on the multi-billion state contracting or business, has been under pressure for its work in Mecca since a crane collapsed on pilgrims in and killed more than 100 people in September 2015. Following the accident, SBG was barred from winning news business in the kingdom and its senior management were not permitted to travel. To cut costs it had to lay off close to 70,000 of its workforce.

The ban was lifted in May but a cash squeeze has left it struggling under debt owed to local and international lenders.

SBG had obtained the SR817m loan from a consortium of eight to nine banks. Dubai Islamic Bank (DIB) led the facility and Emirates NBD, Noor Bank and Ajman Bank were among the participants.

SBG had SR1.071bn riyals of approved payments on work completed on the project up until December 2015 which the Saudi government had yet to pay. It had since filed a further SR1.3bn of claims for work covering the period January-April 2016, for which approval is still awaited, news report cited sources as saying.

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