Saudi builder Dar al-Arkan is able to repay a $1 billion Islamic bond due this year and will not seek government aid, a top executive said, rejecting allegations that the company may struggle to pay its debts.
Dar, the kingdom's largest property developer, will use cash on hand and proceeds from land sales to repay the bond, or sukuk, maturing in July, Chief Financial Officer Andy Raheja, told Reuters in an interview.
It is also in talks with lenders to refinance a smaller 700 million Saudi riyal ($190 million) loan facility with an asset-backed Islamic facility using its Al Qasr Mall in Riyadh as collateral.
Last week a website questioned Dar's ability to repay upcoming debt, including the sukuk. The website "Dar Al Arkan Crisis" published documents alleging corporate malpractice, regulatory breaches and fraud. Raheja dismissed all the allegations.
"We do not need to rely on any external help from the government or from our equity investors to achieve our sukuk repayment neither are we seeking it," he said at the company headquarters in Riyadh.
Raheja said Dar will repay the sukuk with 2.5 billion riyals in cash and the rest coming from land sales.
He said the funds would be raised over the next four months.
Dar sold 1 million square meter of land in the fourth quarter, earning 800 million riyals.
"We expect to sell similar levels in the first two quarters (of 2012), which will be adequate to support the sukuk repayment," Raheja said. The developer has about 35 million square meters of land and could offload more in the future if needed.
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