Saudi builder MMG’s former chairman proposes plan to save company

The former chairman of Saudi construction firm Mohammad al-Mojil Group (MMG) has proposed a plan to save the financially troubled company, including recapitalisation and a mechanism to recover money it says it is owed by contractors.

Adel al-Mojil resigned as chairman in June, along with other members of the board, but still has shares in the company. His father, who founded the company 60 years ago, still holds a 50-per cent stake.

“I present here elements of a practical solution to the company’s problem that will return part of the shareholder value,” he told a rare news conference in Zurich.

He said the company had suffered losses of SAR1.5bn ($400m) after its 2008 public listing as a result of bills that had not been paid by contractors while working on projects for state oil giant Saudi Aramco.

It aims to collect between SAR700m to SAR900m ($187m-$240m) in claims from other firms as part of a recovery plan, according to former company officials.

Mojil’s proposals include forming a new independent board of directors, recapitalising the company via “unconventional equity and debt instruments” and presenting an amicable settlement of trade creditors’ demands.

He also suggested that Saudi Aramco should set up a committee to supervise the payment of money he said MMG was owed by contractors on Aramco projects.

Saudi Aramco did not immediately respond to an emailed request for comment sent outside normal business hours.

MMG’s board quit in June when the Saudi stock market regulator (CMA) sentenced three people, including Mojil and his father Mohammad, to between three and five years in prison. They are appealing.

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The three were found guilty of manipulation and fraud relating to the MMG’s initial public share offer in 2008 – a decision which the company said was based on “fundamentally flawed” evidence. The CMA also ordered payment of SAR1.6bn ($427m) in damages.

Later in June, the CMA said it would form a committee to oversee MMG.

At a news conference in a posh Zurich hotel, Mojil, dressed in traditional Arab robe and headdress and accompanied by his attorney, denied accusations of wrongdoing, insisting his family and MMG had always acted in good faith.

MMG said on Monday it had written to Deputy Crown Prince Mohammed bin Salman explaining that it may not be able to continue operating. It was unclear if the privately owned company was seeking financial or other assistance from the government.

Read more: Troubled Saudi builder MMG appeals to deputy crown prince

“We have sent two letters, one letter to (late) King Abdullah and to King Salman and we have talked to a number of ministers and responsible authorities for Aramco,” Mojil told reporters through a translator. “There was no response.”

He said the press conference was being held in Zurich because of “special circumstances”, but did not elaborate.