Saudi Binladin seeks $217.8 mln loan extension after payment delay

File picture Saudi Binladen Group's Giwar stand at the Cityscape international real estate exhibition in Dubai (File: AFP)

Saudi Binladin Group has sought an extension on an $217.8 million Islamic loan that matured last week and which was being used to fund construction on the kingdom's Grand Mosque site, sources aware of the matter said.

 The request to delay the payment, originally due on July 15, was because the Saudi government had yet to reimburse the construction firm for work carried out earlier, the sources said on condition of anonymity.

 The company has been hit by government spending cuts and by its suspension from receiving new state contracts since September last year, when a crane accident killed 107 people at the Grand Mosque.

Sources say construction major has continued work on the mosque renovations, despite the delays in and a criminal investigation into the incident.

 A state-linked newspaper reported last week that engineers and two government officials will face trial over the deaths.

 The ban on Binladin was lifted in May, although the company still has an estimated debt of around $30 billion.

 According to sources, Binladin has $285 million  of approved payments on work completed on the project up until December 2015 which are still outstanding.

 It has filed a further $346 million of claims for work covering the period January-April 2016, for which approval is still needed.

 In lieu of these receivables being paid, the builder has asked the banks to accept an extension to August 31 on the murabaha facility, a cost-plus-profit arrangement which is compliant with Islamic financing standards.

 As well as Dubai Islamic Bank, the consortium of around eight to nine lenders which provided the murabaha were mainly from the UAE and includes Emirates NBD, Noor Bank and Ajman Bank, two of the sources said.

 The sources said the creditor banks would likely agree to the extension as they were confident they would eventually be repaid, given the project's importance to Saudi Arabia.

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Last Update: Wednesday, 20 May 2020 KSA 09:47 - GMT 06:47
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