Alhokair Group gets CMA nod on capital cut to SAR 343 mln, rights issue

The Capital Market Authority (CMA) approved Abdulmohsen Alhokair Group for Tourism and Development’s (Alhokair Group) request to reduce its capital from SAR 550 million to SAR 343 million, thus reducing the number of shares from 55 million to 34.3 million, the authority said in a statement.

This approval is conditional on the company’s extraordinary general assembly (EGM) approval and completion of the necessary procedures in relation to the applicable regulations, the statement added.

The group will publish a disclosure document to its shareholders related to the proposed method of capital reduction and the expected effect of such reduction within sufficient time prior to the EGM to enable shareholders to vote on the capital decrease.

Logo of Alhokair Group

The CMA’s approval of a particular company’s application to reduce its capital should never be viewed as an endorsement of the feasibility of the capital decrease. It merely means that the regulatory requirements as per the Capital Market Law and its Implementing Regulations have been met.

In addition, the CMA issued its resolution approving Alhokair Group’s request to increase its capital by way of rights issue valued at SAR 307 million.

This approval is conditional on the group’s EGM approval of the capital reduction and completion of the necessary procedures in relation to the applicable regulations.

The increase will be limited to the shareholders who are registered in the shareholders registry at the Securities Depository Center (Edaa) as of the closing of the second trading day after the EGM, which will be determined by the company’s board of directors at a later date.

The offering price and the number of shares offered for subscription will be determined by the company after market closing of the same day in which the EGM is to be held.

The rights issue prospectus will be posted and made available to the public at a later time, the statement added.

The authority also noted that an investment decision based on the company’s board recommendation to increase its capital or the CMA’s approval without carefully reading the rights issue prospectus or fully reviewing its content may involve high risk. Therefore, investors should carefully read the prospectus, which contains detailed information on the company, the offering and risk factors. Thus, providing investors the ability to evaluate the viability of investing in the offering, taking into considerations the associated risks.

If the prospectus proves difficult to understand, it is recommended to consult with an authorized financial advisor prior to any investment decision.

The CMA’s approval of the prospectus should never be considered as a recommendation to participate in the offer nor invest in the company's shares. The CMA’s approval of the prospectus merely means that the legal requirements as per the Capital Market Law and its Implementing Regulations have been met.

In October 2020, Alhokair Group’s board of directors recommended capital reduction by 37.64% from SAR 550 million to SAR 343 million, by cancelling 20.7 million shares to offset accumulated losses. The recommendation also included a capital increase through SAR 307 million rights issue, according to data compiled by Argaam.