- Discussions involve shift of 16.7% holding to Turkey’s TAV
- Three-way partnership has 25-year contract to run airport
Saudi Oger Ltd., the construction company owned by Lebanon’s Hariri family, is in talks to sell half its stake in the company that operates Saudi Arabia’s Medina airport to Turkish partner TAV.
The two companies have started discussing the transfer of a 16.7 percent stake in Tibah Airports Development, TAV said in an e-mailed statement. The deal would allow TAV, which also operates Turkey’s busiest airport in Istanbul, to raise its holding to 50 percent from 33.3 percent. Saudi Oger holds 33.3 percent of Tibah with Al Rajhi Holding Group and it wasn’t immediately clear if it will sell or retain its other 16.7 percent.
The airport generated 140 million euros ($157 million) of sales and 41.1 million euros of Ebitda in 2015 and is valued at about 338 million euros, Efe Can Kalkandelen, an analyst at Istanbul-based Is Investment, said in an e-mailed report on Wednesday. The three companies have been operating Medina airport, which served 5.8 million passengers last year, since 2012 under a 25-year concession contract that will expire in 2037.
Thousands of construction workers for companies including Saudi Oger and Saudi Binladin Group have been left stranded in Saudi Arabia without pay after the government cut spending and delayed payments to contractors as it seeks to cope with a plunge in oil prices. Deputy Crown Prince Mohammed bin Salman told Bloomberg earlier this year that Oger’s problems were unrelated to the Saudi economy and were a result of the company’s debts.
“We have paid them many installments, but they have debt in and out of Saudi. So as soon as money is transferred to their bank accounts, the bank withdraws it. Saudi Oger can’t cover their own labor costs. That’s not our problem, that’s Saudi Oger’s,” Prince Mohammad said in an interview with Bloomberg on April 4. “If the bank withdraws our installments and Saudi Oger can’t pay a thing to its own contractors and workers, that’s their own problem.”
TAV, in which Aeroports de Paris owns 38 percent as the biggest shareholder, fell 1.8 percent to 11.03 liras at the close in Istanbul, the lowest price since Aug. 5.