Another construction giant, Al-Khodari, filed for bankruptcy after facing financial distress attributed to mismanagement and an inability to adapt to market changes. The lack of a robust strategic plan led to operational inefficiencies and mounting debts.
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Abdullah Abdul Mohsin Al-Khodari Sons Company (Al-Khodari) is a Saudi Arabian construction firm that has experienced significant challenges and strategic management failures in recent years. Here’s an elaboration on the company’s situation:
Company Background
- Founded in 1966 and based in Al-Khobar, Saudi Arabia
- Specializes in heavy civil and industrial infrastructure construction, including earthworks, roads, and buildings
- Registered as a vendor/contractor with major entities like Saudi Aramco, Petro Rabigh, and NEOM
Financial Struggles and Market Performance
- The company has faced severe financial difficulties in recent years
- Al-Khodari’s stock price has shown volatility, reflecting its financial challenges
- In 2018, the company attempted to increase its capital to address financial issues
Governance and Transparency Issues
- In June 2024, the Capital Market Authority (CMA) convicted 10 investors associated with Al-Khodari for violating capital market laws
- Fawaz bin Abdullah bin Abdulmohsen Alkhudari was sentenced to six months imprisonment for making incorrect statements and failing to disclose essential information
- Multiple board members were convicted of insider trading and disclosing internal information about the company’s financial position
Legal and Regulatory Consequences
- The CMA banned the convicted individuals from working in companies listed on the Saudi exchange for periods ranging from one to six years
- These actions resulted from coordination between the CMA and relevant authorities, based on a public penal lawsuit filed by the Public Prosecution
Recent Developments and Attempts at Revival
- As of January 2025, Al-Khodari continues to operate but faces significant challenges
- The company has been working on restructuring efforts and attempting to improve its financial position
- Al-Khodari’s ability to recover from its financial and legal troubles remains uncertain
The case of Al-Khodari highlights the importance of transparent financial reporting, strong corporate governance, and adherence to capital market regulations in the Saudi Arabian business environment. It also demonstrates the increasing regulatory scrutiny and enforcement actions in the Kingdom’s financial markets.
