Mohammad Al-Mojil Group has announced that it has signed an agreement with two members of the Al Hokair Group which will see them inject cash into the business in return for a 40% stake.
Fawaz Abdulmajid Al-Hokair and Salman Al-Hokair have agreed to pump around $87mn (SR227mn) into the Dammam-based contractor – $60mn (Sr227mn) of which will be in capital and the remaining $27mn (SR100mn) through a loan.
This will allow for a debt restructuring, which will eventually see the pair own 40% of the business through their Riyadh-based investment vehicle, Saudi FAS Holding.
The remaining 60% will be split between the firm’s founders and the members of the public who had invested in the shares.
The agreement will also see MMG’s board restructured to take account of the new rules, but is subject both to regulatory approvals and a definitive agreement being reached within six months.
In a statement to the Saudi stock exchange, MMG said it represented “a significant step in the process of (the) restructuring plan of MMG to achieve profitable operations and rectify its shareholders’ equity position”.
MMG had suffered from a number of difficult years after taking on too many lossmaking contractings and in 2012 it declared a loss of $353mn on revenues of $373mn, which had brought its accumulated losses to over $550mn, with liabilities outweighing assets by $261.2mn.
Although losses last year were less than a tenth ($34.7mn) of 2012, the company replaced former CEO Stewart Macphail earlier this month, appointing William Milligan as CEO.
