Mohammad Al Mojil Group struggling for survival
Lenders freeze accounts as Saudi FAS funding deal falls through
The auditors of Saudi contracting giant Mohammad Al-Mojil Company (MMG) have said there are "multiple material uncertainties" about the company's abilty to continue as a going concern as the firm continued to rack up heavy losses, scuppering a potential rescue deal and causing its lenders to freeze accounts.
The Dammam-based company has revealed a 446% increase in losses for the three months to 30 June of $53.9mn (2013: $9.9mn), which means bringing the total losses declared by the firm in a three and-a-half-year period from the beginning of 2011 to 30 June to $741.5mn - or more than 200% of its issued share capital of $333.3mn (SR1.25bn).
As a result, the firm has "experienced further cash flow difficulties" and a rescue deal announced last month which would have seen two members of the Al Hokair family inject $147mn (SR400mn) in cash and loans through their Saudi FAS Holding business in return for a 40% stake in the business has been called off.
This news, and the fact that it said it would be unable to complete the sale of its marine business "on the basis previously proposed" has meant its banks have refused to release money in company accounts.
"MMG is not therefore in a position to make critical payments, including salaries," it said.
MMG's shares have been suspended from the Saudi Arabian stock exchange, Tadawul, for more than two years. Last month, the company appointed William Milligan as its third CEO in under three years.
"Negotiations are ongoing to resolve these immediate difficulties and to resume progress towards agreement of financial restructuring between all key stakeholders, including the lenders," it said in a statement to the stockmarket.