Al-Khodari cancels Saudi ministry contracts, incurs $50m losses
Contractor withdraws from 300-bed hospital project in Qatif and 200-bed facility in Ar Rass due to cash flow challenges
Saudi Arabia’s Tadawul-listed loss-making contractor, Abdullah Abdul Mohsin Al-Khodari Sons & Co, announced it was withdrawing from a hospital project in Qatif – part of the kingdom’s Eastern Province – and another maternity and children’s facility in Ar Rass, resulting in losses of $50.2m (SAR188.5m) for the builder.
Al-Khodari won a $65.4m (SAR245.4m) contract for the 300-bed Qatif hospital in 2013, and signed an agreement for Phase 1 of the project with Saudi Arabia’s Ministry of Health in September that year.
In January 2014, the contractor announced that it had won a deal to build a 200-bed maternity and children’s hospital in Ar Rass.
Worth $83.5m (SAR313.1m) and spanning 36 months, Al-Khodari’s contract for the project had been signed with Saudi’s health ministry.
Withdrawing from the Qatif and Ar Rass projects will respectively result in losses worth $25.8m (SAR96.8m) and $24.4m (SAR91.7m) for the contractor, according to two Arabic-language statements on Tadawul.
Al-Khodari said it was exiting the contracts due to challenges related to its cash flow and the associated costs of resources required to implement the projects.
The hospital contracts’ cancellation comes months after Al-Khodari terminated a $24.6m (SAR92.4m) deal with Saudi Arabia’s transport ministry for a two-lane road through Al Wadiah, Najran, and Sharorah.
Al-Khodari announced in February 2019 that its accumulated losses of $295.2bn (SAR1.1bn) amounted to 198.52% of its capital at the time, attributing the negative balance to cash flow challenges.