PHOTO
Saudi Arabia’s PetroRabigh said its board has recommended a capital reduction followed by a capital increase, by way of a 7.95 billion riyals ($2.12 billion) rights issue, to strengthen the company's financial position.
In a bourse filing on Tuesday, PetroRabigh, a joint venture between Saudi Aramco and Japan's Sumitomo Chemical, said this follows a review in October of its accumulated losses, representing 13.76 percent of the capital.
To offset the accumulated losses, the company will reduce capital by 13.76 percent, or from 8.76 billion riyals to 7.55 billion riyals. It will cancel 120,510,300 ordinary shares, where one ordinary share will be cancelled for every 7.3 ordinary shares. This will reduce the number of shares from 876,000,000 ordinary shares to 755,489,700 ordinary shares.
Following that PetroRabigh will increase its capital through a rights issue for 7.95 billion dirhams.
Saudi Aramco and Sumitomo Chemical Co. Ltd., both owning 37.5 percent stakes in the joint venture, will subscribe to their portion of the capital increase by way of capitalizing a portion of amounts owed to them by PetroRabigh.
It has appointed HSBC Saudi Arabia as the financial adviser in relation to the capital reduction and the capital increase. It has also appointed Khoshaim & Associates as its legal advisor in connection with the transactions.
The capital reduction and the rights issue are subject to approval from the capital market regulator, PetroRabigh's extraordinary general assembly as well as some of its lenders.
The oil refining and petrochemical company made a third quarter net profit of 221 million riyals compared to a year-ago loss of 610 million riyals. However, compared with the previous quarter this year, its net profit fell nearly 70 percent.
(Writing by Brinda Darasha; editing by Seban Scaria)
Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.
© ZAWYA 2021
