March 15, 2018 / 2:56 PM / 8 months ago

Exclusive: Saudi state expected to take 35 percent stake in Saudi Binladin Group

RIYADH/DUBAI (Reuters) - The Saudi government is expected to take a 35 percent stake in construction giant Saudi Binladin Group (SBG) as part of a financial settlement with state authorities, sources told Reuters on Thursday.

The figure — previously unknown — was confirmed by four sources familiar with the matter.

It represents the total stakes of chairman Bakr Binladin and his brothers Saleh and Saad, all of whom were detained in an anti-graft crackdown in November alongside scores of other businessmen, princes and officials, according to some of the sources.

A formal transfer of control has not yet taken place, causing prolonged uncertainty about the fate of the company two months after it announced that some shareholders might transfer part of their holdings to the state against outstanding dues.

Officials from SBG and the government were not immediately available for comment. Reuters could not independently confirm the status and whereabouts of the three Binladin brothers.

Most detainees in the anti-corruption probe were released after reaching settlements with the authorities, who say they arranged to seize more than $100 billion in assets through such deals.

But the government has provided few details about who was detained in the sweep, what they were accused of and how much they gave up.

Family-owned SBG, which had more than 100,000 employees at its height, is the biggest builder in Saudi Arabia and is important in Riyadh’s plans for large real estate, industrial and tourism projects to help diversify the kingdom’s economy beyond oil.

The group was hurt by an industry slump due to weak oil prices, delayed payments by the government for big projects and a temporary exclusion from new state contracts after a crane accident killed 107 people at Mecca’s Grand Mosque in 2015.

The cash squeeze forced the company to halt work at projects including Jeddah’s new King Abdulaziz International Airport and the King Abdullah Financial District in Riyadh.

Its financial woes also led SBG, founded by a Yemeni immigrant in the 1940s, to delay salary payments to tens of thousands of its employees, most of them low-paid foreign laborers who were eventually laid off and repatriated.

The company appeared to have pulled back from crisis by mid-2016, after hiring overseas experts and drawing up a new business plan focused on private-sector leisure projects and overseas business.

In February, sources told Reuters that SBG has been awarded a contract in a project to build palaces for the king, crown prince and other senior royals at NEOM, a huge new business zone on the Red Sea coast

Following the detention of the Binladin family members, the finance ministry formed a five-member committee comprised of two other Binladin brothers and three independent businessmen to further restructure the firm.

Writing by Katie Paul; Editing by Ghaida Ghantous/Keith Weir

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