Riyadh: Zain Saudi Arabia, the kingdom's newest mobile phone operator, said yesterday it is in talks with lenders after missing some commitments last year on a two-year $2.5-billion (Dh9.18 billion) Islamic loan.
The announcement by the firm 25-per cent owned by Kuwait's Zain is a fresh reminder that Gulf Arab corporate debt problems could be far from being over at a time when economies in the region hope that 2010 will be a year of recovery.
Investor confidence in the region has been hit over the past eight months by up to $22 billion of debt restructurings at two prominent groups and more recently by Dubai World's request for a standstill on $26 billion worth of debt.
Shares in Zain Saudi slipped 1.47 per cent in the wake of the news, dragging the main index of the Saudi bourse the only regional market trading Saturday, two per cent into the red.
Zain Saudi Arabia said its creditors pardoned it under the condition they agree to a financial plan for 2010 which will be presented by the firm, the company said in a statement published on the Saudi bourse's website as an addendum to its earnings statement on Tuesday.
"The firm is in contact with creditors to provide them with this information based on the company's current financial forecasts to ensure that it honours these commitments for the quarterly periods ," it said citing an auditors' note.
It said however its ability "to ensure a timely delivery on commitments and to continue in its business hinges on the firm's ability to ensure adequate funds on time and also on its success in discussing and changing some of the commitments for the four quarters to end-December, 2010".
It did not disclose details on the size of the missed commitments nor about the banks involved in the talks.
It said, however, that current liabilities at the end of 2009 exceeded its current assets by 4.9 billion riyals (Dh4.79 billion).