Report: Saudi Oger Faces Debt Restructuring
Well-informed sources in Riyadh said that the Saudi government has finished the talks that were aimed at saving construction giant Saudi Oger that now faces the possibility of debt restructuring worth billions of dollars to avoid collapse, media reports said on Friday.
The Saudi government owes Saudi Oger about 30 billion riyals (8 billion dollars) for construction works carried out by the company, a sign that the country's public finances are under pressure as the result of falling oil prices, according to a prominent source in Saudi Arabia.
With the delay in collecting these huge amounts of money, Oger has struggled to meet its liabilities which include 15 billion riyals in loans and billions owed to contractors and suppliers and about 2.5 billion riyals overdue salaries and end of service benefits for workers.
The reasons behind the Saudi government’s termination of talks to save the company from collapse were not clear, and its collapse may shock the Saudi banking sector and the economy in general.
A mid-level Oger manager said that the ministry of finance had not made due payments on his multi-billion-riyal government project for almost a year.
According to the source, the Saudi government owes Oger ten billion riyals that the government had approved to disburse but not yet paid.
Negotiations were conducted between the company and the Saudi authorities to find a solution this year to the financial problems of the company, but a clear date has not been set for the start of these negotiations.
Saudi Oger has built some of the most grandiose complexes in Riyadh, including the palatial Ritz-Carlton hotel.
It employs about 50,000 people of various nationalities.
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