Red Sea International, a leader in construction solutions and prefabricated buildings, announced a new strategic financial step: its subsidiary, Primary Installations for Electrical Works, signed an agreement to renew Sharia-compliant financing facilities with the National Bank of Saudi Arabia.
According to the company's official statement on the Saudi Stock Exchange (Tadawul) website, the new agreement extends for one year and includes a significant amendment to the credit facility. The credit limit has been reduced, at the company's request, to SAR 200 million, compared to SAR 280 million in the previous agreement dated November 5, 2024. This move reflects the company's strategy for managing its financial obligations and improving the efficiency of its liquidity utilization.
Details of guarantees and purpose of financing
The company explained that the primary purpose of these facilities is to support operational processes by issuing final guarantee letters, advance payment guarantee letters, and financing regular documentary credits (whether sight or deferred), which enhances the subsidiary's ability to implement its existing and future projects.
Regarding the guarantees provided for this financing, these included a promissory note for SAR 200 million signed by the Primary Installations for Electrical Works Company. The agreement also included corporate guarantees of SAR 102 million from Red Sea International Company and another guarantee of SAR 68.6 million from Mim Sin Ba Holding Company. In addition, personal guarantees were provided by related parties, including a guarantee of SAR 19.6 million from Mr. Fares Esmat Abdul Samad Al-Saadi and a guarantee of SAR 9.8 million from Mr. Ziad Jan Al-Sayigh.
The economic context and the importance of the contracting sector
This move comes at a time when the contracting and construction sector in Saudi Arabia is witnessing remarkable growth driven by the Kingdom’s Vision 2030 projects. The Red Sea International Company plays a pivotal role in this sector, particularly in providing rapid construction solutions and prefabricated buildings required by major projects, workers’ residential complexes in remote areas, and development projects.
Renewing these facilities with the National Commercial Bank (NCB), the largest financial institution in the Kingdom, is a testament to the mutual trust and financial strength of the company. Credit facilities are a lifeline for contracting and installation companies, providing the necessary liquidity to purchase raw materials, pay workers, and ensure the uninterrupted flow of supply chains—all crucial for delivering projects on schedule.
Expected impact
This renewal is expected to strengthen the financial position of the primary installations company, enabling it to participate in new tenders and expand its operations in the local market. Furthermore, the reduction in the value of the facilities indicates improved cash flow or a decreased need for excessive borrowing, a positive sign for investors regarding the prudent management of financial resources within the Red Sea Global Group.
