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Saudi Arabia’s Jabal Omar Development Company has submitted a non-binding offer to settle its unpaid dues for three leased hotels and a commercial centre in the kingdom.
The largest-listed developer in Saudi Arabia announced last year that it had suspended rental payments totalling 270 million riyals ($71.9 million) for the properties leased to the firm by Alinma Makkah Real Estate Fund, as revenues fell due to the coronavirus pandemic. The dues were for May to November 2020.
In a filing to the Saudi Stock Exchange (Tadawul) on Monday, the company said it has submitted a non-binding offer to the fund manager for the settlement of all payment obligations and other liabilities in exchange for the issuance of more than 193 million shares. The share will be issued to the unitholders of the funds.
However, the offer is still subject to the acceptance of the real estate fund.
“The potential transaction will be implemented through a capital increase of the share capital of the company by way of debt conversion whereby the company will convert its liabilities towards the fund and/ or the fund related entities (the debt) into equity,” the developer said.
The developer has appointed SNB Capital as its financial advisor for the potential transaction.
Last March 2017, the developer had sold three hotels and commercial centre to Alinma Makkah Real Estate Fund for 6 billion riyals and agreed to operate them under a 10-year lease deal for an annual rent of 540 million riyals.
The sold assets were Concorde Makkah Hotel, Hilton Suites Makkah Hotel, Hyatt Regency Hotel and Souk Al Khalil.
Last May 2020, the developer said it has ceased rental payments totalling $72 million due to “force majeure” resulting from the pandemic.
(Reporting by Cleofe Maceda; editing by Seban Scaria )
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