Emaar, The Economic City “Emaar EC” (4220) has unveiled a capital optimization plan to fuel its growth strategy.
Rescue Plan
- Bank debt restructuring: The company signed a “non-binding term sheet” to reschedule all its facilities with 4 local banks. The company’s outstanding debts to the banks total approximately SAR 3.47 billion.
As part of the rescheduling, the banks will extend a new credit facility to Emaar with a total commitment of approximately SAR 301.4 million.
- New shareholder loan: The company also signed a non-binding term sheet with the Public Investment Fund (PIF) to obtain a potential shareholder loan of up to SAR 1 billion.
- Capital Decrease: The Board of Directors issued two recommendations to shareholders: The first involves reducing the company’s capital by SAR 5.63 billion by canceling about 563 million shares. This would represent 49.69% of the firm’s capital, aimed at offsetting accumulated losses incurred at the end of H1 2024.
- Debt Conversion: The second recommendation from the Board involves increasing Emaar’s capital by converting outstanding debt to PIF, amounting to SAR 3.97 billion, into new ordinary shares.
So what
The Ministry of Finance signed a “loan assignment agreement” with PIF, under which Emaar’s total outstanding debt to the ministry, totaling approximately SAR 2.9 billion, would be transferred to the fund.
Market Reacts
At the beginning of Sunday’s trading session, Emaar’s stock dropped 4.88% to SAR 8.58, before narrowing its losses to 3.33% by 10:30 AM Riyadh time.
Now what
Emaar is currently setting its sights on positioning King Abdullah Economic City, which it is developing, as a global industrial hub. The City is particularly being eyed as a regional electric vehicle (EV) manufacturing center, and “Ceer,” Saudi Arabia’s first EV brand, is helping realize that target.
