Financing and Investment The Treasury Department is responsible for cash management and provision of funding for the different projects of the Company. Cash is managed daily, and the surplus funds are invested in short-term Murabaha agreements depending on the Company’s financial needs and obligations. Should the Company needs cash, it uses operating capital financing or liquidates short-term investments. Moreover, The Treasury Department is also responsible for processing payments of all divisions and business units of the Company after being reviewed and audited. The Department also oversees the Company’s bank accounts and banking relations inside and outside the Kingdom. The Treasury Department manages long-term financing obligations of the existing companies by following up with them, ensuring availability of cash to meet regular obligations, and providing all requirements of the financing banks in accordance with the existing financing agreements. Bahri focuses on low-risk secure investments. In this respect, it invested part of its cash surplus in Sukuk and Murabaha agreements. The Company is also committed to develop its investment and financing policies in line with Islamic Sharia, as around 99% of the Company’s financing facilities are made in line with Islamic Sharia.
Investment in shipbuilding requires significant capital. Bahri finances an average 30% by its own resources, while the remaining 70% comes from external sources.
On June 22, 2014, Bahri signed a Murabaha financing agreement with JPMorgan Chase Bank (Riyadh branch) and Samba Financial Group and Saudi British Bank (SABB), amounting to SAR 3,182,812,500, to finance the merger of Vela’s fleet and operations, as well as the related expenses. This bridge financing will last for 12 months. The Company is currently arranging for a long-term financing for up to 10 years through issuing Sharia-compatible Sukuk to payout the bridge financing. Moreover, the Company has adopted a hedging policy against fluctuations in financing expenses. To this end, the Company signed a number of hedging agreements to reduce impact of unexpected rise in financing costs. The Company’s total facilities subject to the hedging policy against risks of fluctuating financing costs amount to SAR 1.533 million for the coming 10 years.
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The National Shipping Company of Saudi Arabia ( )
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