Al-Khodari cancels $25m contract with Saudi transport ministry
Loss-hit contractor requests deal's termination after concerns raised over cost of resources required to build two-lane highway
Saudi Arabian construction contractor Abdullah Abdul Mohsin Al-Khodari Sons & Co has terminated its road-building contract with the kingdom’s Ministry of Transport citing lack of adequate resources to deliver the project.
The cash-strapped company asked the government to terminate its $24.6m (SAR92.4m) infrastructure agreement for a two-lane road through Al Wadiah, Najran, and Sharorah in the south of the kingdom.
Al-Khodari said it was concerned by the cost of resources the project would require, and confirmed that the transport ministry's cancellation would lead to a financial impairment cost of $9m (SAR33.8m).
In a missive to Saudi bourse Tadawul in February 2019, the contractor said its cumulative losses had reached $295.2m (SAR1.1bn) – or 198.5% of its capital.
Payment delays and an increase in the Saudisation rate for large contracting companies were cited as key factors impairing Al-Khodari.
A restructuring activity is under way at the contracting outfit.