Makkah, Saudi Arabia; 21 November 2021: Jabal Omar Development Company (“JODC” or the “Company”), one of the largest real estate development companies in the Kingdom of Saudi Arabia, announced today the receipt of the Ministry of Finance’s approval to restructure an existing SAR 3 billion Murabaha loan facility. This agreement will have several immediate and significant long-term positive impacts on the Company’s financial position, enabling it to accelerate the pace of development of its Jabal Omar masterplan and support the Government’s efforts in achieving its goal of welcoming 30 million pilgrims by 2030.

The agreement to restructure the SAR 3 billion Ministry of Finance Murabaha loan facility, which was granted in December 2011, consists of splitting the facility equally into two tranches. One SAR 1.5 billion tranche will remain a bullet Murabaha loan with more favourable rates and extended maturity while the second SAR 1.5 billion tranche will be converted into a perpetual junior Islamic equity-like financial instrument, that is junior to all other debt instruments. Also, as part of the agreement the outstanding interest payment of SAR 440 million (based on the terms of the previous loan agreement) will be waived. Details of the key changes are provided in Table 1.

This significant agreement will have the following immediate impact on the Company’ financials:
– Reduces the Company’s total liability by SAR 1.94 billion
– Over SAR 440 million in outstanding interest payment that has been waived will be reflected in Q4 2021 income statement

The agreement will also have a significantly positive impact on the Company’s financial position in the mid to long-term including:
– Deleveraging its balance sheet and improving its debt-to-equity ratio
– Improving its cashflow profile, enabling the Company to meet its other debt obligations
– Reducing its total debt servicing levels, enabling the Company to put the funds towards more value-enhancing use
– Improving the Company’s capital structure, enabling it to optimize the funding mix required for the completion of the outstanding phases of the masterplan

Khalid Al-Amoudi, Chief Executive Officer of JODC, said:
“This is a major milestone for our capital structure optimization plan that will set us on a more sustainable course towards completing the Jabal Omar masterplan. Our immediate focus remains on executing the financial transformation plan to support the completion of the outstanding phase. With the gradual reopening of the Kingdom to pilgrims post Covid-19, and our now more stable financial position, we are more confident in our ability to ramp up operations and construction mobilization on site.

We would like to thank the Ministry of Finance for their continuous support. By working collaboratively together, we will enable the Kingdom to realize its goal of welcoming 30 million Hajj and Umrah pilgrims by 2030 and developing one of the holiest cities in Islam, into a unique and prime destination that remains true to its culture and heritage while offering memorable experiences for all its visitors.”