The embattled contractor could be taken over by investors close to Saudi royal family
Saudi Oger, one of the biggest contractor in the Saudi Arabia, could be taken over by private investors close to the kingdoms ruling family, according to sources aware of the matter.
Saudi government, which has faced intense diplomatic pressure in recent months due to the ongoing labour crisis at the company, is understood to support the takeover deal. The authorities aim to end the labour troubles as soon as possible and protect the lenders who have a combined SR13bn ($3.45bn) exposure to the firm, sources aware of the government discussion said.
An announcement about the companys future could come within weeks, according to two Saudi-based bankers.
The lenders in the kingdom are also hearing that the government could give Saudi Ogers control to a state-owned investment firm through a royal decree, which could come before the Eid holidays in the second week of September, the bankers said.
The corporate communications department at Saudi Oger did not respond to emailed request for comment. Calls made to companys headquarters went unanswered.
Banks have individually been pursuing Saudi Oger to recover the outstanding loans, a Riyadh-based banker said, adding that there is no formal creditors committee in place as yet as companys top officials are not available to discuss the matter. The banks are now awaiting a move by the government.
Majority of the banks in Saudi Arabia are exposed to the company through construction finance. National Commercial Bank (NCB) has outstanding loans of up to SR3.5bn, Samba about SR1.5bn and Saudi Arabia British Bank (Sabb) about SR1bn, said the banker.
Spokespersons of NCB, Samba and Sabb didnt respond to request for comments.
The company, which is owned by the family of former Prime Minister of Lebanon Saad Hariri, had relied on multi-billion dollar state contracting is facing severe cash flow issues after the government withheld payments and cut spending on new projects amid falling oil prices.
Saudi Oger hasnt paid its employees in months and owes about $800m in salaries alone. The cash it requires to pay the trade creditors, sub-contractors and services it loans are on top of that amount.
Saudi Oger and Saudi Binladin Group (SBG) are among the top contractors in the country. SBG, which was under the spotlight earlier this year after violent labour protests in Jeddah and Mecca, has reduced its staff by 70,000 and claims to have cleared their dues. SBG is back in governments favour, winning new business in the kingdom and it has managed to secure fresh finances from banks to shore up its cash position.
The government in February had slowly stared releasing payments to contractors held from the middle of 2015, however, it is not clear, what is the amount Saudi Oger has received so far for the work it has already finished.
The firm is at the heart of the labour problems in the kingdom and has reportedly abandoned thousands of workers from India, Pakistan, Philippines and Bangladesh at camps without food or medical attention, forcing them to endure harsh living during the hot summer.
Riyadh has attracted a lot of unwanted attention after reports of suffering workers hit the local and international media, followed by a visit from one of Indias foreign minister to negotiate safe return of about 10,000 of his countrymen and payment of withheld wages.
Pakistans Minister for Oversees Pakistanis is the latest to hold talks with authorities in the Kingdom. The other countries taking up the cause of the unpaid workers include the Philippines, France and Bangladesh.
Saudi government has now taken the onus upon itself to take Saudi Oger to task. Authorities are going to pursue the contractor through kingdoms judicial system and get the workers their dues. It has hired lawyers to press the wages claims of the stranded workers through the labour dispute system, Labour Minister Mufrej al-Haqabani said last week.
Saudi Oger now well take it to the courts. Now we are responsible for that. Weve hired lawyers, The minister was as cited as saying by the local media. As the ministry, we will go through the labour dispute courts to go after Saudi Oger and to collect the claims.