Beirut (APD) -The petrochemical giant Saudi Basic Industries Corporation (SABIC) intends to acquire a stake of SR 3.8 billion (about $1 billion) in Kayan Petrochemicals, the Riyadh-based business daily al-Iqtisadiya reported Thursday.
"Kayan Petrochemicals sought at an earlier time to obtain this sum as a loan," a source in Kayan told al-Iqtisadiya.
"The SR 3.8 billion will become part of Kayan's capital which will amount to SR 10 billion," the source said.
Kayan was established last year with a paid-up capital of SR 3.2 billion. In addition to SABIC's contribution to capital, the company plans to raise SR 3 billion by offering shares to the public through an IPO.
The company was formed with the objective of establishing petrochemical manufacturing plants in the Jubail 2 industrial city. In previous announcements, it did not make details of these projects public.
Kayan is waiting for a final agreement with SABIC before it submits its request for the IPO to the Saudi Capital Market Authority.
The company had nursed plans for an IPO already at its founding last year. It postponed these plans as it cancelled capital contributions by a group of founding investors reported in Saudi media to number 100 individuals.
The amounts were returned and a court in Riyadh in September rejected a case brought against Kayan by one of these investors.
The partnership with SABIC will empower the market stamina of Kayan and will create new opportunities for the two companies, Khaled al-Muqairin, one of Kayan's founders, told al-Iqtisadiya.
The two companies signed a memorandum of understanding (MoU) on Wednesday, according to an announcement on the website of the Saudi Stock Exchange, Tadawul.
Under the MoU, SABIC would revise all works, studies and agreements in addition to the updating of the economic feasibility study of the Kayan Petrochemicals project within a period of two months.
SABIC intended to become a partner in the Kayan project and would sign a final agreement after the appraisal, Tadawul reported without giving further details about the project.
The Saudi ministry of commerce and industry provided Kayan Petrochemicals in July 2005 with a license as a Saudi closed joint stock company. Founding members in the venture included 23 companies and institutions such as Gassim Agricultural Company (GACO) and Yamama Saudi Cement Company. [TS]
By Shikrallah Nakhoul, APD Staff Writer in Beirut
© APD (Arab Press Digest) 2006
