United Electronics Company (eXtra) announces the signature of Receivable Finance Murabaha Agreement (Securitization) with Al Rajhi Bank worth SR 166 M
| Element List | Explanation |
|---|---|
| Announcement Detail | United Electronics Company (eXtra) announces that it has successfully closed a Securitization deal with Al Rajhi Bank on 26 June 2019 against the assignment of a portion worth SR 166 M of its installment sales’ receivables portfolio.
The transaction is considered the first for the Company as well as the first non-asset backed Securitization transaction in the Kingdom of Saudi Arabia. The transaction demonstrates the Company’s success in managing its installment sales business from all aspects, with accomplished records of delinquency and bad debts ratios marking 10% and 3% respectively for its receivables portfolio worth SR 377 M by the end of Q1 2019.
This transaction is intended to secure diversified funding sources for eXtra, which in turn will reflect positively on the Company’s key financial indicators and on its future credit rating.
Worth mentioning that the transaction will yield an instant cash inflow worth SR 160 M that will be utilized for repayment of the Company’s indebtedness to the banks. It will also lead to the derecognition of the sold receivables from our financials. Furthermore, it will have an impact on the company’s profitability by SR 12.1 M inclusive of a contingency provision amounting to SR 10 M. Below is the expected future financial impact on the company’s bottom line: - Increase of Q2 profitability by SR 17.2 M - Decrease of Q3 profitability by SR 10.1 M - Decrease of Q4 profitability by SR 7.6 M - Decrease of 2020 profitability by 11.7 M |
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