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Saudi Banks Acquire 80% of Debt Burdening Construction Firm ‘Binladin’

Saudi Banks Acquire 80% of Debt Burdening Construction Firm ‘Binladin’
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Saudi Banks Acquire 80% of Debt Burdening Construction Firm ‘Binladin’

Saudi Banks Acquire 80% of Debt Burdening Construction Firm ‘Binladin’

The Binladin International Holding Group, one of the Middle East’s biggest construction companies, is witnessing remarkable progress in its debt restructuring plans as reports revealed that Saudi banks acquired nearly 80% of the company’s debt.

Binladin’s CEO Khalid al-Gwaiz, in an interview with Al Arabiya TV channel, revealed that the company’s debt was not far from 33 billion riyals ($8.8 billion) and added that the ongoing restructuring process with lenders is the biggest in the Middle East.

Last week, the construction company held a virtual meeting with lenders to discuss a restructuring proposal approved by the company’s board that it said would align “stakeholder incentives to support the company.”

Gwaiz said lenders have indicated preliminary approval for the plan, according to the Al Arabiya report. He also said a formal initial agreement is expected in June, before details are finalized and documented by September or the fourth quarter.

Binladin, according to Gwaiz, has identified opportunities in the construction market in the Kingdom amounting to one trillion riyals by 2025.

These opportunities are mainly linked to government projects.

Binladin’s share of those mega projects will contribute to payback creditors, Gwaiz confirmed.

“Restructuring is vital for developing Binladin’s capacity for taking on mega projects,” Saudi economist Abdullah al-Malghouth told Asharq Al-Awsat.

He added that Binladin’s strategy goes to show that Saudi companies have begun to move in the right direction in terms of drafting organized, transparent and reliable strategies.

The kingdom’s laws aim to resolve any obstacle that could hinder the work of companies, Saudi legal consultant Faisal al-Khriji told Asharq Al-Awsat, adding the restructuring of debt is supported by Saudi regulations.

Last month, Binladin said it will offer creditors “several options to enhance their recoveries” by taking part in new company projects.

It said the plan would give the company a platform to grow, raise cash, fund new projects and launch a turnaround.

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US Treasury Targets Russia's Gazprombank with New Sanctions

FILE PHOTO: A bronze seal for the Department of the Treasury is shown at the US Treasury building in Washington, US, January 20, 2023. REUTERS/Kevin Lamarque/File Photo
FILE PHOTO: A bronze seal for the Department of the Treasury is shown at the US Treasury building in Washington, US, January 20, 2023. REUTERS/Kevin Lamarque/File Photo
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US Treasury Targets Russia's Gazprombank with New Sanctions

FILE PHOTO: A bronze seal for the Department of the Treasury is shown at the US Treasury building in Washington, US, January 20, 2023. REUTERS/Kevin Lamarque/File Photo
FILE PHOTO: A bronze seal for the Department of the Treasury is shown at the US Treasury building in Washington, US, January 20, 2023. REUTERS/Kevin Lamarque/File Photo

The United States imposed new sanctions on Russia's Gazprombank on Thursday, the Treasury Department said, as President Joe Biden steps up actions to punish Moscow for its invasion of Ukraine before he leaves office in January.
The move, which wields the department's most powerful sanctions tool, effectively kicks Gazprombank out of the US banking system, bans its trade with Americans and freezes its US assets, Reuters reported.
Gazprombank is one of Russia's largest banks and is partially owned by Kremlin-owned gas company Gazprom. Since Russia's invasion in February 2022, Ukraine has been urging the US to impose more sanctions on the bank, which receives payments for natural gas from Gazprom's customers in Europe.
The fresh sanctions come days after the Biden administration allowed Kyiv to use US ATACMS missiles to strike Russian territory. On Tuesday, Ukraine fired the weapons, the longest range missiles Washington has supplied for such attacks on Russia, on the war's 1,000th day.
The Treasury also imposed sanctions on 50 small-to-medium Russian banks to curtail the country's connections to the international financial system and prevent it from abusing it to pay for technology and equipment needed for the war. It warned that foreign financial institutions that maintain correspondent relationships with the targeted banks "entails significant sanctions risk."
"This sweeping action will make it harder for the Kremlin to evade US sanctions and fund and equip its military," Treasury Secretary Janet Yellen said. "We will continue to take decisive steps against any financial channels Russia uses to support its illegal and unprovoked war in Ukraine."
Gazprombank said Washington's latest move would not affect its operations. The Russian embassy in Washington did not respond to requests for comment.
Along with the sanctions, Treasury also issued two new general licenses authorizing US entities to wind down transactions involving Gazprombank, among other financial institutions, and to take steps to divest from debt or equity issued by Gazprombank.
Gazprombank is a conduit for Russia to purchase military materiel in its war against Ukraine, the Treasury said. The Russian government also uses the bank to pay its soldiers, including for combat bonuses, and to compensate the families of its soldiers killed in the war.
The administration believes the new sanctions improve Ukraine's position on the battlefield and ability to achieve a just peace, a source familiar with the matter said.
COLLATERAL IMPACT
While Gazprombank has been on the administration's radar for years, it has been seen as a last resort because of its focus on energy and the desire to avoid collateral impact on Europe, a Washington-based trade lawyer said.
"I think that the current administration is trying to put as much pressure and add as many sanctions as possible prior to January 20th to make it harder for the next administration to unwind," said the lawyer, Douglas Jacobson.
Officials in Slovakia and Hungary said they were studying the impacts of the new US sanctions.
Trump would have the power to remove the sanctions, which were imposed under an executive order by Biden, if he wants to take a different stance, Jacobson said.
After Russia's invasion in 2022, the Treasury placed debt and equity restrictions on 13 Russian firms, including Gazprombank, Sberbank and the Russian Agricultural Bank.
The US Treasury has also worked to provide Ukraine with funds from windfall proceeds of frozen Russian assets.