Riyadh – Mubasher: The Saudi Mobile Telecommunications Company’s (Zain) board of directors decided on Tuesday, 24 October reducing capital by 38% to SAR 3.62 billion, from SAR 5.84 billion to amortize the accumulated losses which amounted to SAR 2.22 billion.

Capital cut will occur through cancelling 222.12 million shares, by 38 shares for each 100 shares, and shares will drop to 361.61 million shares from 538.73 million shares, according to a statement on Wednesday to the Saudi Stock Exchange (Tadawul).

The capital decrease will be implemented at the end of the day following the extraordinary general meeting (EGM) that will approve the capital reduction.

Zain confirms that the shareholders’ ownership ratios will not be affected by capital reduction, as well as capital decrease will not impact negatively on the firm’s commitments and activities.

After Zain implemented capital decrease, Zain plans to raise capital to reach SAR 9.62 billion, through issuing right shares at SAR 6 billion.

The rights shares will be offered to shareholders who are registered in the shareholders register, at the day of the EGM meeting which will approve capital increase.
Capital hike will be subject to regulatory approvals of the Saudi Capital Market Authority (CMA) and the EGM.

The Kingdom-based telecommunications provider forecasted that capital restructuring will pump new liquidity that will be used to trim the firm’s debts.

Zain expected that its capital restructuring will improve the company’s financial position, and enhance profits.

On 25 May, Saudi Arabia-based telecommunications firm appointed Saudi Fransi Capital (SFC) as financial advisor to help the company in exploring different choices to strengthen its financial position.

The board of directors appointed on 24 October extended the work of SFC and named Baker & McKenzie Lim as legal advisor to manage the capital cut and right shares issue.

Earlier on Wednesday, Zain stated that it turned profitability after achieving SAR 3 million in the third quarter of 2017, against losses of SAR 266 million in the year-ago period.

By 12:07 pm KSA time, Zain stock tumbled 5.99% to SAR 6.91.