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Al Mojil announces recovery plan

Al Mojil announces recovery plan
MMG
1310
2.98% 38.00 1.10
Mohammad Al Mojil Group announced its recovery plan which was unanimously approved by the board on Oct. 16, 2014.

The elements of the Recovery Plan are as follows:

1. Subject to the outcome on ongoing negotiations with potential new investors and to regulatory approval, the Board of Directors will recommend a reduction in the Company share capital by 90% from SR 1,250 million to SR 125 million consequently reducing total number of shares from share capital from 125 million to 12.5 million shares, a ratio of 10:1. The reason for this reduction is to partially offset losses accumulated in previous years.
2. Subject to the outcome of ongoing negotiations with potential new investors and with the Company lenders, the Company expects to negotiate a significant reduction in the amount payable to the lenders in respect of outstanding Murabaha facilities, subject to the possible transfer of certain rights and or benefits to the lenders.
3. Subsequent to the share capital decrease recommended in 1 above and subject the outcome on ongoing negotiations with potential new investors and to regulatory approval, the Board of Directors will recommend a share capital increase by rights issue and/or preferred shares. The reason for this increase is to facilitate the restructuring of the Company.
4. The Board of Directors approved the formation of a committee to supervise the implementation of the Recovery Plan, comprising the following members: a. Eng. Adel M. Al-Mojil b. Mr. Osama Asaad c. Mr. William MilliganThe committee shall update the Board of progress on the implementation of the plan.
5. The overall strategy of the Company shall be based on the following principles:
- Rapid rectification of the Company cash flow position to facilitate timely payment of essential items including payroll and related costs.
- Timely completion of continuing legacy projects, subject to agreements with customers on ongoing payment of amounts due to the Company.
- Transfer, as quickly as circumstances allow, of resources, including labour, to new profitable business opportunities, particularly time and material priced contracts.
- Transition of the company various other activities to a standalone profitable basis.
- Entry into new contracts only on firm expectation of a reasonable profit margin, using appropriate costing techniques.
- Close monitoring of progress on all future contracts, ensuring that variances from expected outcomes are identified, investigated and rectified in a timely manner.
Financial Forecasts: Following financial restructuring, it is anticipated that all continuing legacy projects will be completed by the first quarter of 2015, facilitating the progressive deployment of resources to profitable new business opportunities, as the Company is confident that there is strong demand for its services once financial stability has been achieved.
This will allow for a return to profitability in the subsequent quarters of 2015, and an overall profitable outcome for 2015, increasing to higher levels in subsequent years.