MMG clarifies bank account suspension

02/07/2014 06:53 AST

MMG issued a clarification on Tuesday, in response to what lately has circulated in some online and social media websites regarding suspending MMG’s bank account and its inability to discharge employees’ salary payments.

Clarifying its stand, MMG stated: “The lending banks declined to release MMG’s bank balances amounting circa SR44 million when MMG requested to do so. MMG believes that this unfortunate action by the lending banks was related to the company’s decision not to extend the final date connected to the approval of the third party’s approval on the sale process of its marine business unit.”

The statement added that on June 23, MMG CEO made a phone call with representatives of the lending banks, in which they made the release of MMG funds from the stated bank accounts subject to meeting one of the following conditions.

They include that MMG, completes the sale of the marine business unit to a party related to the chairman of the board of directors of one of the lending banks within one week from date of the phone call; the current major shareholder or the new strategic investor deposits SR170 million in an escrow account to be returned once the company completes the sale of its marine business; or MMG sells other assets equal in value to the above-mentioned amount.

“Surprisingly afterward. the company received a notice from its facilities’ agent on instructions of the lending banks notifying that MMG has violated its obligations under the facilities agreement; therefore, MMG is denied access to any withdrawals, wires and payments out of its funds deposited at the bank accounts.

“This happened despite MMG CEO’s requesting explicitly the lending banks to release a minimum of SR5 million to cover the basic needs of its employees. However,, the lending banks acting through their representative informed the company they will not release such funds until one of the mentioned 3 conditions is met.

“MMG management believes that it is in the company’s current best interest not to dispose the marine business unit as it recently signed a memorandum of understanding (MoU) with a strategic investor as recently announced on Tadawul website on June 19.

“The management believes that the marine business unit can be developed or otherwise sold at a higher market value ranging between SR250 and SR500 million. Due to the restriction imposed by the lending banks, MMG has been unable to discharge its employees’ salary payments. The company confirms that such restriction imposed by the lending banks is not in the company’s best interest and it could damage its restructuring efforts. MMG will take all the necessary steps to protect its interests.”

Arab News