Saudi Arabia’s Emaar The Economic City (EEC) said on Sunday it submitted an application to the Capital Market Authority (CMA) to lower its capital, based on the recommendations of its Board of Directors.
In a statement to Tadawul, the company said that the proposed capital decrease is one component of its recently announced capital optimization plan, designed to stabilize the company’s financial and operational positions and optimize its capital structure to enhance its ability to move forward with its growth plans.
The request stipulates reducing the capital from 11.33 billion riyals to 5.7 billion riyals, by canceling 563.116 million shares of the company’s shares, representing a value of 5.6 billion riyals.
The company is responsible for master planning the entire King Abdullah Economic City.
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.
