Al-Khodari’s capital hike won’t settle all debts, says CEO

Abdullah A. M. Al-Khodari Sons Co.’s plan to issue new shares for suppliers will not settle all of its outstanding debts, chief executive Fawwaz Abdullah Al-Khodari told CNBC Arabia on Monday, adding that total accounts payable to subcontractors reached SAR 505 million in 2016. 

The Saudi builder, however, owes little dues to some suppliers, which do not meet capital hike requirements.

Vendors and creditors can liquidate the new shares issued after obtaining approval from the Capital Market Authority (CMA) and the company’s shareholders.

The planned capital hike will reduce Al-Khodari’s liabilities and use cash flows to improve its performance, Al-Khodari said, adding that it will help cut the leverage ratio— a key prerequisite for securing bank loans to finance future projects at a lower cost in light of improved credit profile.

The company currently has over SAR 300 million in receivables from government entities, he said, citing other payments owed to the company without giving more details.

Al-Khodari added that the company is committed to paying or rescheduling its remaining debt, depending on receivables collection.