Creditors of troubled developer Saudi Binladin receive loan payments

Creditors of troubled construction heavyweight Saudi Binladin Group have received SAR1.85bn ($493m) in loan payments related to Saudi Arabia’s Grand Mosque project in Mecca, banking sources told Reuters.

The banks received the money since the detention of the firm’s chairman Bakr bin Laden last weekend as part of a wider anti-corruption purge in the kingdom.

It was not immediately clear whether the payment, which related to the periodic installment of fees, commission and part settlement of the principal on the loan, was initiated by the company before his arrest, the sources said.

After dominating the kingdom’s construction scene for decades, Binladin’s lofty position has been threatened by government spending cuts, economic reforms and a temporary suspension from new state contracts after a crane accident killed 107 people at the Grand Mosque in 2015.

Its plight has eased since the start of the year after the government began to settle some of the late payments it owed the contractor.

Saudi Arabia’s Ministry of Finance last week paid Binladin SAR6bn to go towards paying smaller contractors and salaries, according to a source familiar with the matter.

Nobody was immediately available to comment from the Ministry of Finance or Binladin.

Bankers suggested the recent outlay from the government eased worries over the company’s future despite the chairman’s detention.

The kingdom restarted work in September on the multi-billion dollar expansion of the Grand Mosque in Mecca, nearly two years after work stopped in the wake of the crane collapse. The company also restarted work earlier this year on the new King Abdulaziz Airport in Jeddah.

But other bankers expressed concern about the company’s ability to operate and settle its debts if its chairman remained under detention.

Saudi officials have stressed the crackdown, which has ensnared dozens of princes, officials and businessmen, should not affect the businesses they have ties to.

The latest loan payment to banks went to Binladin’s account with Dubai Islamic Bank, a second banking source said, which provided a syndicated facility to the builder with a consortium of mainly United Arab Emirates-based banks.

Dubai Islamic Bank declined to comment.