Saudi Focus

SBG pulls back from brink

August 2016

Saudi Binladin Group (SBG), the kingdom’s biggest construction conglomerate, appears to have pulled back from the brink of a financial crisis that risked damaging the wider economy, said experts.

The contractor was barred from receiving new state contracts altogether after one of its cranes toppled into Makkah’s Grand Mosque during a storm, killing 107 people. 

Facing a severe cash squeeze, it has been forced to halt work at a string of projects and lay off thousands of staff. But the government has taken a more benign approach to SBG in the past three months, letting it resume bidding for new contracts and, according to banking and construction industry sources, making some long-overdue payments to the group.

This has helped the firm pay salaries to some 10,000 workers, secure a SR2.5 billion ($667 million) loan from local banks, repay bondholders and resume work at some stalled projects. SBG resumed work at the Jeddah airport in early June and repaid holders of a SR1 billion ($267 million) Islamic bond maturing late that month. The company has hired about 30 finance and management professionals from overseas and drawn up a new business plan. An SBG spokesman said it had finished laying off and compensating about 70,000 foreign workers, reducing staff numbers from about 200,000 over the past several months.

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