Deloitte advised on financial restructuring of Saudi construction firms
Eastern Trading and Contracting Company and Eastern Precast Concrete Company received majority approval from respective creditor groups on March 6, 2022
Deloitte has said that its Turnaround and Restructuring Team has advised on the financial restructuring of Eastern Trading and Contracting Company and Eastern Precast Concrete Company.
The two firms are Saudi-based contracting companies with more than $320 million of debt spread across seven Saudi Arabian banks and more than 2,400 creditors. Established in 1971, Eastern Trading and Contracting Company is one of the largest construction companies in the Kingdom’s Eastern Province and has a current project portfolio of $346 million across construction, building, engineering and real estate segments with Saudi government and semi-governmental entities.
Eastern Precast Concrete was established in 2008 and offers precast concrete solutions for a variety of different structures. It has worked on several governmental projects in KSA.
On March 6, 2022, both companies received majority approval from their respective creditor groups, Deloitte said, adding that its Turnaround and Restructuring Team has now successfully advised on five Financial Restructuring procedures since the introduction of the KSA bankruptcy law in late 2018, with over $2.7 billion of debt across these transactions.
“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,” said Waleed Sobahi, Audit Partner at Deloitte in Saudi Arabia, who 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, he added.
Combined, these solutions enable the companies to align their debt position with the forecast debt service capacity and allow for adequate recapitalisation.
