Banking sources say delayed payment is sign of modestly easing pressure on struggling contracting giant
Contracting giant Saudi Binladin Group (SBG) has repaid a 1 billion riyal ($266.7 million) Islamic bond that matured in late June, a sign of modestly easing pressure on the embattled firm, banking sources told Reuters.
The payment came after a delay of several weeks and used money from a 2.5 billion riyal loan the company secured from two local banks in May, the banking sources said.
A Binladin spokesman declined to comment on the company's financial situation.
Gulf commercial bankers have said they believe it owes local and international banks a total of about $30 billion.
Binladin's liquidity has been squeezed for months as a result of a general slump in construction, and as the government cut spending and delayed payments in response to low oil prices.
The company has suffered even more severely since the Saudi government barred it from bidding for new state contracts last September, after one of its cranes fell in Mecca's Grand Mosque during a storm, killing 107 people. The ban was lifted in May.
The crisis has forced Binladin to halt work on several high-profile projects in the kingdom and delay months of salary payments to workers - an action which resulted in rare public protests in the kingdom.
In the past few months, it has laid off some 70,000 workers, all of whom were compensated, according to the SBG spokesman.
The 2.5 billion riyal May loan was raised to help pay for the costs of laying off staff, including back salaries and severance costs, sources said at the time.
However, some of this cash -- which was only secured after Binladin put up land as collateral -- has now been diverted to meet the sukuk obligation.
Binladin issued an Islamic bond with a 364-day tenor worth 1 billion riyals in late June of last year, priced with a profit rate of 2.5 per cent, Reuters reported at the time.
The investment banking arm of Gulf International Bank and BNP Paribas' Saudi unit arranged the sukuk, which was to be used to finance costs related to its work at the King Abdul Aziz International Airport in Jeddah.