Saudi's Dar Al Arkan refutes 'crisis' claims

Dar Al Arkan Real Estate Development Co said it’s in compliance with regulatory requirements and on track to meet payments, including Islamic bonds due in July.

Saudi Arabia’s second-biggest property company by market value responded to questions from Bloomberg News after a website by the name of “Dar Al Arkan in Crisis” said it had “prepared an archive of information and evidence which details a series of fraudulent actions, regulatory breaches and corporate malpractice.”

“We categorically deny that Dar Al-Arkan is facing any sort of crisis,” the developer said.

The yield on Dar Al-Arkan’s 10.75 percent dollar-denominated Islamic debt due February 2015 soared 42 basis points, or 0.42 percentage point, the most since Nov 28, at 5:19pm in Riyadh. The shares declined 2.1 percent, paring their rise this year to 26 percent.

Dar Al Arkan plans to repay about SR5bn ($1.3bn) as it sells land to build cash holdings, Andy Raheja, the company’s chief financial officer, said in an interview on Feb 15. Fourth-quarter profit beat analyst estimates even after dropping 12 percent to SR289.6m because of lower land and apartment sales.

“Our business is robust and we are on track to repay all debts as they come due including the upcoming sukuk in July,” Dar Al Arkan said. The overall intent of the website seems to be to “lead readers to false conclusions, mixing fact and fiction and to harm Dar Al Arkan by creating a false image of a company,” it said.

“Dar Al Arkan is seeking legal advice to take action against this website, as it is hosted in Russia,” the company said.

The developer has SR6.2bn of bonds due until the end of 2015, according to data compiled by Bloomberg. This includes a $1bn Islamic bond due in July.