Saudi Arabia’s Emaar The Economic City has revealed a plan to restructure its finances to better support its growth goals, according to a statement on the Saudi Stock Exchange (Tadawul).
The company reported a dramatic increase in losses for the first half of the year, reaching 694 million riyals, compared to 76.2 million riyals during the same period in 2023.
Key points of the restructuring plan include:
On September 5, the Saudi Ministry of Finance transferred the remaining 2.9 billion riyals of a loan from Emaar The Economic City to the Public Investment Fund (PIF).
Emaar The Economic City (EEC) has signed a non-binding agreement with PIF for a potential new loan of up to 1 billion riyals ($266 million).
The company, the ministry, and PIF have agreed to transfer existing mortgages from the ministry to PIF, eliminating any debt owed to the ministry.
In September 2021, PIF acquired a 25% stake in Emaar The Economic City by converting part of a 2.8 billion riyal loan into shares.
The Ministry of Finance agreed to extend the loan's grace period by one year, to June 2025, and to add 192 million riyals in interest for 2024 to the loan.
The board recommended reducing the company’s capital by 5.63 billion riyals by canceling 563 million shares to cover losses. It also suggested increasing capital by converting 3.97 billion riyals of debt into new shares.
The company has also signed agreements to reschedule loans with several banks, totaling 3.47 billion riyals, and secure additional credit of 301.5 million riyals.
After the announcement, Emaar The Economic City’s share price fell initially but later stabilized.
Fahad Al-Saif, Chairman of EEC, said the restructuring will help the company align with Saudi Vision 2030. CEO Abdulaziz Al-Nowaiser added that it will improve the company’s financial position and enable faster opportunity capture.
Mohammed Al-Farraj from Arbah Capital expects the restructuring to improve the company’s long-term performance and market value by lowering financing costs and improving efficiency.
He noted some short-term volatility but believes the company will be better equipped to handle future challenges.
Converting debt into shares will make PIF a shareholder rather than a creditor, strengthening their relationship and supporting future plans.
