CEO: Embattled Saudi builder Mojil to keep operating
Mohammad Al Mojil Group will continue operating despite the resignation of its board after three people involved with the company were found guilty of fraud
Embattled Saudi Arabian builder Mohammad Al Mojil Group (MMG) will continue operating despite the resignation of its board after three people involved with the company were found guilty of fraud, its acting CEO said on Thursday.
Indebted MMG’s plight comes against the backdrop of wider turmoil in the Saudi construction industry, which is struggling in the face of reduced government spending in response to low oil prices.
But CEO Nauman Sohail said the business outlook for the company is improving and the board resignations do not threaten its existence.
"We are more comfortable now as compared to what we used to be in 2014/15," he told Reuters, adding that MMG is establishing new business units such as scaffolding services and expects its equipment rental operation to start generating profit by July or August.
MMG's shares have not traded on the Saudi bourse since July 2012, when the CMA suspended the stock over losses incurred as the company overextended itself trying to take advantage of a construction boom in the kingdom.
Since then the company, the workforce of which has tumbled to 3,000 from 25,000, has been trying to rebuild, partly by seeking payment of hundreds of millions of riyals it says it is owed for completed work.
Sohail said MMG had made a net profit of about 10 million riyals in the first quarter, aided by debt recovery. He does not expect a profit for the second quarter but said a profit is likely in the third quarter.
The board resignations announced by MMG on Monday came after the Capital Market Authority (CMA) sentenced three people involved with the business, including founder Mohammad Al-Mojil and his son Adel Al-Mojil, the company's chairman, to between three and five years in prison.
The three were found guilty of manipulation and fraud relating to the family-controlled company's initial public share offering in 2008. MMG said on Monday that the decision was based on "fundamentally flawed" evidence.
The CMA also ordered payment of 1.6 billion riyals ($427 million) in damages.
Sohail said he now expects the CMA to appoint a temporary committee to oversee MMG, which would call a general assembly of shareholders to appoint a new board.
He did not say when this might happen and a CMA official, contacted by telephone, said the regulator could not provide immediate comment.