Malath board recommends 60% capital cut to offset losses

The board of directors of Malath Cooperative Insurance and Reinsurance Co. on Wednesday recommended a 60 percent capital reduction to SAR 120 million from SAR 300 million.

In a statement to the Saudi bourse, Tadawul, on Thursday, the insurer said it will cancel 18 million shares (1.8 shares for every three outstanding shares).

The move is aimed at restructuring the company’s capital in compliance with the new corporate law and offsetting accumulated losses.

The capital cut, which is subject to approval of the regulators and shareholders at the upcoming extraordinary general assembly meeting, will have no material impact on its liabilities, Malath added.

Shareholders’ stakes will remain unchanged after the capital reduction, while fractional shares, if any, will be sold by the insurer. Proceeds will be distributed to shareholders according to their eligibility.

Meanwhile, the board’s proposal for raising the  capital through a SAR 260 million rights issue is still pending the approval of competent authorities and shareholders, the statement added.