- Subscription commitment received from strategic investors
- Funds raised to bolster financial position and accelerate long-term growth strategy
(Riyadh) Fawaz Abdulaziz Alhokair Co. (“Alhokair” or the “Company”, 4240 on the Saudi Exchange), the leading franchise retailer in Saudi Arabia, today announced its Board of Director’s decision to recommend to its shareholders a capital decrease of 46.2% down to SAR 1,130.8 million to fully offset accumulated losses of SAR 969.2 million as at 30 September 2021.
The Board has also recommended a subsequent capital increase of 88.4%, after finalizing the capital reduction, by way of a rights issue. The rights issue is expected to raise SAR 1,000 million by issuing 100 million new shares. Total share capital will be SAR 2,130.8 million. Alhokair intends to use the proceeds to reinforce the company’s overall financial and operational position by:
- Repaying a portion of its outstanding debt to improve the Net Debt to EBITDA ratio,
- Fund strategic growth plans, explore new value accretive initiatives
- Continue developing our infrastructure and digital transformation to support our e-commerce business
- Improve cash flows to balance operational requirements with long term returns.
Marwan Moukarzel, Chief Executive Officer at Alhokair said: “The rights issue represents a key strategic milestone in Alhokair’s vision to transform into the leading lifestyle retail destination in the Kingdom and across chosen markets. The access to new funding will expedite our ability to execute on our operational upgrade strategy and build up the resources needed to support the Company’s business growth. We remain confident that we are on the right path to create sustainable long-term value for our customers, investors, brand partners, and other stakeholders and strategic partners.”
The company's capital alteration recommendation is subject to the approvals of relevant regulators and the Extraordinary General Assembly to be held in due course.
Alinma Investment and Credit Suisse Saudi Arabia have been appointed as financial advisors for the capital reduction and increase as well as for the necessary applications to the authorities for approval. Alinma Investment has also been appointed as the lead manager and underwriter for the capital increase.
“The proposed recapitalization is a continuation of Alhokair’s transformation process and an essential part of the operational upgrade strategy which will further optimize the balance sheet by gradually reducing debt and improving the cost of capital. We are certain that our capital allocation initiatives will speed up growth and position the company to deliver sustainable shareholder returns in the long-term,” said Ahmed Belbesy, Chief Financial Officer at Alhokair.
The Saudi retail sector, and in particular the consumer discretionary sub-sector, continues to display favorable underlying fundamentals expected to drive solid compound growth over the medium term. These include the growth in socialization and leisure activities as strong social element where shopping and eating out are becoming engrained in the lifestyle of Saudi Arabians. Rising urbanization rates, increasing female participation in the labor force and material investments in the retail sector as part of Saudi Vision 2030 also underpin an exciting growth story.
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© Press Release 2021
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