Former chairman proposes plan to save Saudi construction firm

Adel Al-Mojil, former chairman of Mohammed Al-Mojil Group (MMG) addresses a news conference in Zurich Thursday. (Reuters)

ZURICH: The former chairman of Saudi construction firm Mohammad Al-Mojil Group (MMG) has proposed a plan to save the company, including recapitalization and a mechanism to recover money it says it is owed by contractors.
Adel Al-Mojil resigned as chairman in June, along with other members of the board, but still has shares in the company. His father, who founded the company 60 years ago, still holds a 50-percent stake.
“I present here elements of a practical solution to the company’s problem that will return part of the shareholder value,” he told a news conference in Zurich.
He said the company had suffered losses of SR1.5 billion ($400 million) after its 2008 public listing as a result of bills that had not been paid by contractors while working on projects for state oil giant Saudi Aramco. It aims to collect between SR700 million to SR900 million ($187-$240 million) in claims from other firms as part of a recovery plan, according to former company officials.
Al-Mojil’s proposals include forming a new independent board of directors, recapitalizing the company via “unconventional equity and debt instruments” and presenting an amicable settlement of trade creditors’ demands.
MMG’s board quit in June when the Saudi stock market regulator (CMA) sentenced three people, including Al-Mojil and his father Mohammed, to between three and five years in prison. They are appealing.
The three were found guilty of manipulation and fraud relating to the MMG’s initial public share offer in 2008 — a decision which the company said was based on “fundamentally flawed” evidence. The CMA also ordered payment of SR1.6 billion in damages.
Later in June, the CMA said it would form a committee to oversee MMG. At a news conference in a Zurich hotel, Al-Mojil, accompanied by his attorney, denied accusations of wrongdoing, insisting his family and MMG had always acted in good faith.
MMG said on Monday it had written to Deputy Crown Prince Mohammed bin Salman explaining that it may not be able to continue operating. It was unclear if the privately owned company was seeking financial or other assistance from the government.
He said the press conference was being held in Zurich because of “special circumstances”.