Red Sea International, a leader in modular building solutions and facilities management, has announced a new strategic financial move aimed at strengthening the financial solvency of one of its subsidiaries, as part of its ongoing efforts to expand its business and execute its existing projects with high efficiency.
In an official statement published on the Saudi Stock Exchange (Tadawul) website, the company announced that its subsidiary, Primary Installations for Electrical Works Company, has signed a Sharia-compliant financing agreement with Saudi Investment Bank. The total value of this facility is SAR 200 million, with a term of up to 307 days, reflecting the mutual trust between the financial institution and the company.
Funding details and strategic objectives
The company explained that the primary purpose of obtaining these bank facilities is to support working capital for current and future projects. The financing will be mainly directed towards issuing final letters of guarantee, advance payment guarantees, and financing both types of standard letters of credit (sight and deferred). These financial instruments are a cornerstone of the contracting and construction sector, ensuring the uninterrupted flow of materials and equipment necessary for projects.
Structure of the guarantees provided
To guarantee the rights of all parties, a robust package of safeguards was provided in exchange for this financing, including:
- A promissory note worth 200 million riyals, signed by the Primary Installations Company for Electrical Works, and guaranteed by both the Red Sea International Company and Mim Sin Ba Holding Company, in addition to personal guarantees from senior partners.
- A proportional and continuous corporate guarantee of 102 million riyals from Red Sea International, supported by the Board of Directors' resolutions.
- Guarantees for companies worth 68.6 million riyals from Mim Sin Ba Holding Company.
- Irrevocable personal guarantees worth 19.6 million riyals from Mr. Fares Esmat Al-Saadi, and 9.8 million riyals from Mr. Ziad Jan Al-Sayegh.
The economic context and the importance of the step
This agreement comes at a time when the construction sector in Saudi Arabia is experiencing rapid growth, driven by the ambitious Vision 2030 projects. First Fix, in which Red Sea International previously acquired a majority stake, is a vital arm specializing in electromechanical (MEP) works. Securing cash flow for the company is crucial to enabling it to participate in new tenders and execute its existing contracts to a high standard.
The Saudi Investment Bank’s cooperation with industrial and contracting companies reflects the Saudi banking sector’s commitment to supporting the growth of national companies and providing financing solutions that contribute to driving economic development, thereby enhancing the ability of local companies to compete and implement major projects.
