Deloitte advises Saudi contractors in multibillion riyal financial restructuring

6 April, 2022 - Deloitte’s leading KSA bankruptcy team has successfully advised on the Financial Restructuring Procedure of Eastern Trading and Contracting Company and Eastern Precast Concrete Company, two Saudi based contracting companies with more than SAR 1.2 billion (USD 320 million) of debt across seven Saudi Arabian banks and over 2400 creditors.

Deloitte’s Turnaround & Restructuring team have now successfully advised on five Financial Restructuring procedures since the introduction of the KSA bankruptcy law in late 2018, with over SAR 10 billion (USD 2.7 billion) of debt across these transactions.

Eastern Trading and Contracting Company was established in 1971 and is one of the largest construction companies in the Saudi Arabia’s Eastern Province, having a current project portfolio of SAR 1.3 billion (USD 346 million) across construction, building, engineering, and real estate segments with prominent Saudi government and semi-governmental entities. Eastern Precast Concrete was established in 2008, offering precast concrete solutions to various types of structures. EPC has established its name in the market by working on several governmental projects in the country. On 6 March 2022, both companies received majority approval from their respective creditor groups.

“Deloitte’s specialised KSA bankruptcy team is uniquely positioned to provide clients with insights and support with an unrivalled track record and the necessary experience of effectively managing restructuring situations. Our streak of successful restructuring under the Financial Reorganisation Procedure is a testament of our capabilities and deep understanding of the KSA bankruptcy law. The law has proven to offer a robust platform for corporates to implement successful restructurings under the supervision of bankruptcy trustees,” said Karim Labban, Partner and Head of Deloitte Middle East’s Turnaround & Restructuring team in Saudi Arabia, who led the delivery of this transaction. Waleed Sobahi, Audit Partner at Deloitte in Saudi Arabia acted as the bankruptcy trustee of the procedure.

The transaction comprised a combination of creative restructuring solutions, including debt to equity conversion, cash injection, asset disposal plan, debt write-off and debt rescheduling. Combined, these solutions enable the companies to align their debt position with the forecast debt service capacity and allow for adequate recapitalisation.

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