Saudi Binladin Group will be slimmed down and renamed, six sources familiar with the matter said, after the government seized management control of the construction giant from family members that were swept up in an anti-graft drive.
The moves would be the first in a broad restructuring planned for Saudi Arabia’s biggest builder as Riyadh takes a stake of at least 35 percent.
The company, crucial to the state’s plans for major tourism and infrastructure projects, is now being run by a five-member committee appointed by the government to oversee the shake-up.
The restructuring, expected to include hundreds of layoffs, is intended to streamline operations at the conglomerate, which has spawned more than 500 units ranging from construction to energy since its formation in 1931, said the sources, who are engaged in the process or have been informed about it.
As part of the reorganization, a new holding company will be formed with a new name, four of them said, without saying whether the name has been chosen or what it might be.
Binladin, which had over 100,000 employees at its peak, is undergoing the transformation after several members of the Binladin family that owns the company were detained in November as part of an anti-graft purge that ensnared hundreds of business people and government officials.
Most of those detained have been released after reaching a settlement with the state. Although Osama Bin Laden, the founder of al-Qaeda who was killed by U.S. forces in 2011, was part of the same family, the company cut ties to him.
One of the sources said the 537 business units under the current company set-up would be rationalized, which could include them being sold off, wound down or merged. The remaining units will be placed under the new structure, the source said.
Among the units expected to remain under the new holding company will be a contractor that will retain the Saudi Binladin name as well as operational maintenance, real estate, energy and advanced technology and business investments, two sources said.
The company’s spokesman and the Ministry of Finance did not immediately respond to Reuters’ requests for comment.
The overhaul is the latest challenge Binladin has faced in recent years after stalled projects, delayed payments and a temporary exclusion from new state contracts after a crane accident killed 107 people at Mecca’s Grand Mosque in 2015.
The group plans to lay off hundreds of staff as part of the restructuring, two separate sources familiar with the matter said. One of the sources said 750 staff were recently given one-month notice and would receive their financial rights in full.
Another source said most of the job cuts involved employees working at Jeddah’s King Abdulaziz International Airport, one of the company’s projects, which is almost finished although delayed beyond the initial May 1, 2018 completion date.
The source said another round of layoffs was expected.
The company has already shed thousands of workers in recent years, but also in recent weeks ordered hundreds of staff who had been on leave from the stalled King Abdullah Financial District project to return to work as the project restarted.
To try to turn around the company’s fortunes, the finance ministry has provided the company with around 11 billion riyals ($2.9 billion) of loans, sources told Reuters last month.
The money will be used to prioritize work on projects deemed critical to the government, as well as to pay staff and creditors, the people said, with one adding that further cash transfers from the government were possible in the near future.
In February, sources told the company had been awarded a contract in a project to build palaces for the king, crown prince and other senior royals at NEOM, a huge new business zone on the Red Sea coast.