Saudi developer Emaar, The Economic City, has finalized a binding restructuring agreement with the Public Investment Fund (PIF) concerning a substantial loan deal valued at SR1 billion ($266 billion). This agreement marks a significant step for the company, which is the master developer of the King Abdullah Economic City located on the Red Sea coast.

According to a statement from Tadawul, the new loan will be available for a period of 18 months following the signing of the amendment and restatement deal. This restructuring is a component of Emaar’s capital optimization strategy, aimed at stabilizing the company’s financial and operational conditions while enhancing its capital to support growth initiatives.

Emaar clarified that this restructuring involves an amendment and restatement of the shareholder loan previously established with the PIF. This earlier loan, amounting to SR1 billion, was fully utilized and entered into on February 19, 2023. The repayment of the loan is scheduled as a lump sum on a date that will be 24 months from the agreement’s signing, which will include both the principal and any associated commission.

The loan is secured by real estate mortgages that are valued at no less than SR1.5 billion, along with promissory notes for the principal and commission amounts. Additionally, the agreement allows the PIF, a related party and major shareholder in Emaar, the option to convert outstanding loan amounts into shares of the company, pending necessary regulatory approvals and shareholder consent.

In October, Emaar reported a widening net loss of SR1.15 billion for the first nine months of 2024, significantly higher than the SR49 million loss recorded in the same period of 2023. The company attributed this downturn to a 74 percent year-on-year revenue decrease, which fell to SR241.16 million compared to SR926.35 million in the previous year. Furthermore, the third quarter of 2024 saw Emaar incur a net loss of SR459 million, contrasting sharply with a net profit of SR27 million during the same quarter in 2023.