International banking syndicate takes Saudi government to court
Two international banks—Germany's Dresdner Bank and Britain’s Barclays Bank—have filed a lawsuit in New York last week against the Saudi government, contending that the kingdom has failed to make an annual $48.5 million loan payment linked to a real estate deal, signed in 1999, reported Dow Jones.
Due on April 1, 2002, the outstanding payment is part of a loan which financed in advance the lease of two residential compounds east of the Saudi capital Riyadh. The leasing agreement was signed between the local Jadawel International Company and the kingdom’s ministries of finance and defense, who required the property to house foreign military personnel.
A syndicate of banks, which also includes Japan's Mizuho Bank and the Saudi American Bank, securitized the leases. Under the loan deal, the Saudi government agreed to pay $900 million in principal and some $400 million in interest by 2008 through the Bank of New York.
While the banks claim Riyadh provided a sovereign guarantee for the loan, the Saudi finance ministry denies giving any sovereign debt obligation for the facility secured. “There’s a royal order signed by the King that confirms this and it’s highly unusual for an obligation of that nature not to be met,” a Barclays official told the Gulf States Newsletter.
Rated as the 18th largest company in the Kingdom of Saudi Arabia in 2000, Jadawel designs, constructs, operates and manages purpose-built residential communities for lease to international clientele. JJWorldwide are the owners and operators of over 35 hotels and resorts around the globe. — (menareport.com)
© 2002 Mena Report (www.menareport.com)