UPDATE 1-Saudi MMG deepens losses as it seeks payment on work

Sat Feb 2, 2013 10:14am EST

Related Topics

* Fourth-quarter loss half that of 4Q 2011 but higher than 3Q 2012

* Cumulative net loss now stands at 2.01 billion riyals

* MMG starting legal action against Petrofac Saudi Arabia (Recasts with more detail, background and lawsuit against Petrofac)

KHOBAR, Feb 2 (Reuters) - Financially troubled Saudi contractor Mohammed al-Mojil Group said on Saturday its cumulative net loss now stands at 2.01 billion riyals ($536 million) after reporting a fourth-quarter net loss of 526 million riyals.

The company is attempting to stabilise its financial position after it replaced its management team last year and held a shareholders meeting in which it voted against liquidation.

Although its fourth-quarter loss was less than half that of the last quarter of 2011, it was considerably more than its third-quarter 2012 loss of 33.8 million riyals.

MMG's net loss over the year was 1.20 billion riyals, compared to 1.11 billion riyals in 2011.

The company is now starting legal action against clients on some major projects to claim payment for work. An MMG official said in an email on Saturday it has started proceedings against the Saudi unit of Britain's Petrofac.

MMG "served a formal notice of arbitration" to Petrofac Saudi Arabia on Wednesday, seeking 177 million riyals for its work on the Karan gas field development, the official said in the email.

"This move follows unsuccessful negotiations to achieve an amicable resolution following the earlier issue of a Notice of Dispute," he added.

A Petrofac Saudi official declined to comment.

On Jan. 20, MMG said it plans to start legal action to collect dues and claims worth more than 400 million riyals ($107 million). It said it was contemplating legal action against two other companies: Saudi Binladin Group and South Korea's SK Engineering and Construction.

Earlier on Saturday MMG said the drop in its quarterly loss from a year earlier was due to a decline in provisions the company took against an expected increase in the cost of completing projects. Its fourth-quarter 2011 loss was 1.18 billion riyals.

However, MMG's liabilities now exceed its assets by 1.37 billion riyals and shareholders face a total deficit in equity of 840 million riyals, it said in the statement.

In November, shareholders in MMG rejected the idea of liquidating the company, which is involved in oil and gas projects, mainly for state oil company Saudi Aramco.

The company's recovery plan includes asset sales, cutting bank debt and absorbing accumulated losses. (Reporting By Reem Shamseddine and Angus McDowall, editing by William Hardy)

FILED UNDER: