Chemanol recommends 27.3% capital cut, followed by SAR 480 mln rights issue

Methanol Chemicals Co.’s (Chemanol) board of directors recommended a 27.3% capital cut from SAR 1.2 billion to SAR 876.96 million through writing off 32.9 million shares (one share for every 3.665 shares), during the extraordinary general assembly meeting (EGM) held today, Oct.11, 2020.

The capital reduction is intended to offset accumulated losses and restructure the company’s capital, the company said in a bourse statement.

The company said that there will be no impact of the capital reduction on its financial obligations.

Meanwhile, the board of directors recommended a capital hike through SAR 480 million rights issue to be implemented following the capital cut.

The capital hike mainly aims at raising Chemanol’s financial solvency, decrease the borrowing rates and the financing costs incurred, the statement added.

The approval of the EGM to the process of increasing the capital by offering right issue is conditional on the company’s EGM approval of the proposed capital reduction.

Eligibility will be to shareholders holding shares on the day of the EGM that approves the capital hike including those registered at the Securities Depository Center (Edaa) at the end of the second trading day following the date of the EGM, which will be determined later.

Both capital cut and capital hike are pending approvals of the general assembly and related regulatory approvals.