Thursday 1 October 2020

Saudi Binladin seeks second extension on loan

DUBAI, September 20, 2016

Saudi Binladin Group (SBG) has requested a second extension on a SR817 million ($217.9 million) Islamic loan being used to fund construction at the kingdom's Grand Mosque, sources aware of the matter said.

The talks to delay the loan repayment, originally due to mature on July 15, came after the Saudi government failed to fully reimburse the construction firm for work at Islam's holiest location, the sources said on condition of anonymity.

It is the second time SBG has sought more time to meet the payment, having previously requested an extension to August 31.

The Saudi Binladin Group could not be reached for comment about the loan, which is a murabaha facility, or a cost-plus-profit arrangement compliant with Islamic financing standards.

The Saudi Ministry of Finance declined to comment.

Two of the sources said the government had paid SBG a small portion of the amount it owed for the Grand Mosque project before the Eid Al Adha Islamic holiday this month but a large amount remained outstanding.

The firm has been the leading builder in the kingdom for several years, delivering a number of major buildings including the expansion of the Grand Mosque in Makkah, which houses the Kaaba, the structure to which Muslims face while praying.

But SBG's lofty status has come under threat from government spending cuts, economic reforms and its temporary suspension from new state contracts after a crane accident killed 107 people at the Grand Mosque last year.

The ban on SBG was lifted in May but a cash squeeze has left it struggling under an estimated $30 billion in debt owed to local and international lenders.

The SR817 million ($217.9 million) loan was from a consortium of eight to nine lenders, mainly from the UAE. Dubai Islamic Bank led the facility and Emirates NBD, Noor Bank and Ajman Bank participated, said the sources. - Reuters

Tags: Construction | loan | grand mosque | SBG |

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