Jabal Omar Development has cancelled its contract with Jadwa Investment for failing to secure US $3.3 billion (SAR 12.4 billion) in financing for a huge mixed use development in Saudi Arabia’s holy city of Makkah.

In a statement to the Saudi stock exchange the firm said the decision was taken after the Riyadh-based investment bank failed to secure project financing within the promised deadline.

In a separate statement, Jabal Omar said it planned to issue a sukuk, the Islamic equivalent to a bond, to its shareholders on June 10.

Jabal Omar raised $537 million by selling a 30% stake in an initial public offering in November 2007, before starting work on the project.

The remaining 70% of the company is held by the owners of the 230,000m2 plot of land in Makkah, across a main street from the Grand Mosque.

The development is one of five mega developments planned for the city and involves the construction of 39 residential and hotel towers with heights ranging from 20 to 48 storeys.

When completed the towers and public courtyards will accommodate 45,000 residents and 150,000 worshipers during peak times.

The project will have a total built up area of 1.2 million m2.

In January, local cement firm Premco Ready Mix, a subsidiary of Construction Products Holding Company (CPC), won a $67 million contract to supply the project with 80% of the 1.1 million cubic metres of concrete needed for the project.

The firm started supply in January and said the project would be completed by December 2010.