One of Saudi Arabia’s contractors has defaulted on almost $2 billion of debt, according to Bloomberg Businessweek Middle East. It comes after a falling out among the company’s owners and delays in payments from the government.
According to unnamed sources quoted in the article, the Saudi unit of Cyprus-based Joannou & Paraskevaides Group defaulted on about 7 billion riyals ($1.9 billion) in bank loans a few months ago. The defaults are said to be largely the result of problems getting paid by the Ministry of Interior. Among the lenders affected are Arab National Bank, Alawwal Bank, Banque Saudi Fransi, Emirates NBD PJSC, Saudi British Bank and Samba Financial Group.
Saudi Arabia halted payments to government contractors as a result of a budget deficit that in 2015 reached $100 billion. The result was that some companies were unable to to pay employees, and one contractor, Saudi Oger Ltd, subsequently collapsed.
J&P’s Saudi unit has has also been impacted by a dispute between the parent company’s shareholders, which led to the parent company being liquidated by Alvarez & Marsal in Cyprus.
The Finance Ministry says it honours payments that fulfil all of the government’s requirements. Last month, the Finance Minister, Mohammed Al-Jadaan, said a committee had been set up to deal with contractor payments and that most disputes have been resolved.
©Copyright Arabian Homes 2018