Deloitte helps Saudi construction group Al Harbi with restructuring

One of Saudi Arabia’s largest construction engineering groups, Al Harbi Trading and Contracting Company, has taken a next step in its multi-year financial restructuring process.

Following a turbulent period, Riyadh-based Al Harbi Trading and Contracting Company finds itself facing approximately SAR 1.8 billion ($480 million) of debt across seven banks and more than 1,200 creditors.

In a bid to enhance its financial sustainability, Al Harbi’s management team developed a plan to restructure its debt pile, which it put forward to the company’s creditors. Following approval from the majority of the creditors, late June the proposal was ratified by the Commercial Court of Riyadh.

The green light kicked off the execution phase, which is being overseen by consultants from Deloitte. The firm had already advised Al Harbi in the previous stages of the process in its role as lead restructuring advisor, and is working closely with the company, the court-appointed bankruptcy trustee, the legal advisor, and the creditor group to bring those plans to life.

The restructuring plan splits the debt into various tranches offering the creditors a diversified repayment structure that leverages the existing assignment of receipts, asset pool, claim recovery and envisaged new business. The plan also includes a combination of debt rescheduling, write-offs and an asset disposal plan which allow Al Harbi to align its debt service capacity with debt commitments and enable an adequate recapitalisation of its balance sheet.

With the Court’s approval, Karim Labban, Partner and Head of Deloitte Middle East’s Turnaround & Restructuring team in Saudi Arabia, said the firm is “proud to have helped Al Harbi and their creditors successfully realise yet another milestone” and to continue to help both parties “navigate the complexity of a financial reorganisation transaction.”

Established in 1965, Al Harbi Trading and Contracting Company has over the past 50+ years grown into one of the twenty largest players in the Kingdom’s contracting sector with key Saudi government and semi-governmental clients, specialising in the transport sub-sector.

In related news, Deloitte is also the restructuring advisor to industry counterpart Azmeel Contracting & Construction Corporation, which is working on a financial restructuring ambition about four times the size that of Al Harbi.