The Ministry of Finance of Saudi Arabia has acquired an 86 percent stake in Saudi Binladin Group Holding after the company’s general assembly approved a capital surge through the conversion of outstanding debt into shares.
In a statement, the board of Saudi Benladin Group indicated that such action by shareholders shows confidence in the future direction and strategy of the company and that the move is one of the major steps to restore financial stability and contribute to the development plans of the group.
The company, which was previously among the largest construction companies in the Kingdom, has been significantly restructured over the last few years in attempts to revive its operations and financial positions.
According to the report published by Al Arabiya, the general assembly of Binladin International Holding Group has given consent on an increase in capital by converting the current debt into equity, with the outcome that 86 percent ownership of the company will be transferred to the Saudi Ministry of Finance.
According to the report, the Binladin Group board of directors indicated that the approval augers well with the future direction of the company and that it will strengthen its development and growth goals.
However, under the new restructuring, the group’s liabilities to the Ministry of Finance are projected to be about SAR23.3 billion ($6.2 billion). These exceptional financial liabilities will be fulfilled by issuing new shares, which will enable the company to lower its debt load significantly and enhance its balance sheet.
Consequently, the Ministry of Finance will join as a majority shareholder of the group, thus putting the government squarely on the growth path of the company, in addition to facilitating the financial stability of the company.
It reported that the debt-to-equity conversion allows the company to repay its debts and improve its financial standing, and it provides the ministry with a direct stake in helping the group to recover and grow in the long term.
The move comes after the Saudi Arabia National Debt Management Center previously reported that it had negotiated with several local and international banks a syndicated loan of around SAR23.3 billion in favor of the Ministry of Finance. The funding was meant to fund the general debt settlement procedure of the Saudi Binladin Group.
The decision is an extension of an announcement by the Ministry of Finance regarding a set of actions to stabilize the financial structure of the group, including the coordinated plans to clear bank dues in collaboration with the company.
