Zain Saudi seek 65 pct capital cut as losses mount
Indebted telecoms operator Zain Saudi will ask shareholders to approve cutting its capital by 66 percent to alleviate mounting losses, it said in a statement on Wednesday.
October 27, 2011 1:12 by Reuters
Zain Saudi has not set a date for a shareholders’ meeting to discuss cutting its share capital to 4.8 riyals ($1.28 billion) from 14 billion riyals.
This will alleviate accumulated losses of 9.2 billion riyals, or 66 percent of its paid-up capital. Bourse rules say listed firms must cut their capital if losses exceed 75 percent.
The board wants to then issue 6 billion riyals of new shares.
“The rights issue will consist of raising fresh equity and the capitalisation of subordinated shareholder loans to the company,” Zain Saudi said in a statement.
The new equity will be used to to reduce bank debt and enhance the operator’s network, it added.
Zain Saudi has liabilities nearing 21 billion riyals, according to its first-quarter results. These include loans from founding shareholders of 3.8 billion riyals and a 9.75 billion riyals Islamic facility that can be rolled over until August 2012. ($1 = 3.750 Saudi riyals) (Reporting by Matt Smith; Editing by Firouz Sedarat)