Sunday, May 27, 2012

DUBAI (Zawya Dow Jones)--Mobile Telecommunications Co. Saudi Arabia, or Zain KSA, said Sunday it has received regulatory approval for a 6 billion Saudi riyals ($1.6 billion) right issue, the proceeds of which will be used for debt reduction and network expansion.

The Capital Market Authority has granted its approval for the prospectus to be issued in relation to the company's proposed rights issue as part of its capital restructuring, Zain KSA said in an emailed statement.

The approval by the CMA follows the decision by the company's board of directors to seek approval for a reduction of its capital, followed by the rights issue, the statement noted.

Zain KSA late last year said that its board had recommended a new capital reorganization plan as it looked to wipe out accumulated losses and eventually raise fresh cash to support its expansion plans.

The capital reduction will result in the company's paid-up capital being reduced to SAR4.801 billion from SAR14 billion. Zain KSA's paid-up capital will be subsequently increased to SAR10.801 billion by way of the rights issue, the company said Sunday.

"The Rights Issue will consist of shareholders in the Company subscribing for new shares in the Company for cash or by capitalising certain subordinated loans made by some of the Company's founding shareholders to the Company," Zain KSA said.

The cash proceeds will mainly be used to reduce the company's current liabilities and enhance the quality and performance of its existing network as well as to expand the company's recently launched 4G LTE hi-speed internet network and reduce bank debt, it added. "The capitalisation of a portion of the shareholder loans will further reduce the debt levels of the Company."

The capital reduction and rights issue are subject to shareholder approval and certain regulatory consents and approvals.

Zain KSA shares closed 1.1% higher at SAR9.05 Sunday.

-By Shereen El Gazzar, Dow Jones Newswires; +971 444 61684; Shereen.elgazzar@dowjones.com; Twitter: @ZDJnews

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

27-05-12 1324GMT