MMG bids to stabilize financial position



REUTERS

Published — Sunday 3 February 2013

Last update 3 February 2013 5:05 pm

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ALKHOBAR: Saudi contractor Mohammed Al-Mojil Group said yesterday its cumulative net loss now stands at SR 2.01 billion ($ 536 million) after reporting a fourth-quarter net loss of 526 million riyals.
The company is attempting to stabilize its financial position after it replaced its management team last year and held a shareholders meeting in which it voted against liquidation.
Although its fourth-quarter loss was less than half that of the last quarter of 2011, it was considerably more than its third-quarter 2012 loss of SR 33.8 million.
MMG’s net loss over the year was SR 1.20 billion, compared to SR 1.11 billion in 2011.
The company is now starting legal action against clients on some major projects to claim payment for work. An MMG official said in an email yesterday it has started proceedings against the Saudi unit of Britain’s Petrofac.
MMG “served a formal notice of arbitration” to Petrofac Saudi Arabia on Wednesday, seeking SR 177 million for its work on the Karan gas field development, the official said in the email.
“This move follows unsuccessful negotiations to achieve an amicable resolution following the earlier issue of a Notice of Dispute,” he added.
A Petrofac Saudi official declined to comment.
On Jan. 20, MMG said it plans to start legal action to collect dues and claims worth more than SR 400 million ($ 107 million). It said it was contemplating legal action against two other companies: Saudi Binladin Group and South Korea’s SK Engineering and Construction.
Earlier yesterday MMG said the drop in its quarterly loss from a year earlier was due to a decline in provisions the company took against an expected increase in the cost of completing projects. Its fourth-quarter 2011 loss was SR 1.18 billion.
However, MMG’s liabilities now exceed its assets by SR 1.37 billion and shareholders face a total deficit in equity of SR 840 million, it said in the statement.
In November, shareholders in MMG rejected the idea of liquidating the company, which is involved in oil and gas projects, mainly for state oil company Saudi Aramco.
The company’s recovery plan includes asset sales, cutting bank debt and absorbing accumulated losses.

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