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Hub On AGORACOM / Corporate Profile / Read Release

Message: Omagine In Talks With Chinese Contractors For Oman Project

An artistic rendition of the $2.5bn Omagine Project (Source: omagine.com)

By Gulam Ali Khan
May 21, 2016
Muscat -

In view of the current weak economic conditions in the GCC region due to the slump in oil prices, Omagine LLC, which plans to develop a US$2.5bn beach-front real-estate and tourism project in Oman, said it is in discussions with two leading Chinese contractors for construction of the project.

In a quarterly report submitted to the US Securities and Exchange Commission (SEC) last week, Omagine LLC's US-based parent Omagine Inc said that since December 2015 Omagine LLC held multiple meetings with Consolidated Contractors International Co (CCIC), CCC-Oman and Royal Court Affairs (RCA) in an effort to conclude the foregoing arrangements and sign the CCC contract for the project. CCC-Oman is a subsidiary of CCIC.

“All parties are willing but the reality of the current economic scene and the effect it is having on bank liquidity and therefore on future requirements that Omagine LLC will have for construction financing was well recognised by all Omagine LLC shareholders,” Omagine Inc said.

It said that extensive financial negotiations and legal re-drafting of multiple versions of the CCC contract and the amended and restated shareholder agreement have taken place since December 2015.

Given the present liquidity issues at local banks, Omagine Inc said the matter of project construction debt financing is an issue that now moved to the forefront of the agendas of all concerned.

Furthermore, as an exercise in caution, the company said Omagine LLC's management in February travelled to Beijing and Hong Kong where they held discussions with top executives of two of China's leading building contractors – each of which is multiple times the size of CCIC.

“These discussions are well advanced at present and negotiations with the larger of the two Chinese contractors are at an advanced stage,” Omagine Inc added.

It said that the proposal being discussed with each of such Chinese contractor is identical and includes a requirement for the award of the Omagine Project construction contract to the Chinese contractor (as a sub-contractor to CCC-Oman) if, and only if, both of the following conditions are fulfilled: (i) an investment into Omagine LLC by the contractor (or its parent company), and (ii) the Chinese contractor (or its parent company) must arrange for the project finance for Omagine Project.

Omagine Inc added the Chinese banks have no such liquidity issue and they are moreover encouraged and directed by Chinese government to support their overseas Chinese contractors in this manner.

“Management is presently cautiously optimistic that it can arrange a transaction involving both CCIC and one of the Chinese contractors which will be beneficial to all parties concerned. No assurance however can be given at this time that management will be successful in this endeavor,” it said.

Omagine Inc added an agreement has been reached with CCIC regarding a new structure of the CCC contract whereby CCC-Oman would be the general contractor and managing contractor (but not necessarily the actual builder) and would oversee and manage the Chinese sub-contractor and CCIC would be paid a fixed fee for this.

“The descriptions of the draft CCC contract as previously disclosed during 2015 are no longer accurate or operative as we have now agreed to a management type general contractor agreement with CCC-Oman based on a flat fee,” the company added.

Omagine said it has held extensive presentations and meetings with local, regional and international banks with respect to the provision of syndicated bank financing, adding “thesediscussions and negotiations are ongoing with Chinese and US-based banks since the onset of the liquidity squeeze in GCC banks.”


Read more: http://www.muscatdaily.com/Archive/Business/Omagine-in-talks-with-Chinese-contractors-for-Oman-project-4pob#ixzz49QZCoxAO

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