Arabian Pipes’ board cancels recommendation to increase capital, maintains 75% cut

Logo of Arabian Pipes Co.

Arabian Pipes Co.’s (APC) board of directors, in a meeting held on Feb. 7, decided to amend its recommendation related to reducing the company's capital, followed by an increase through offering right issue shares.

The board revised its recommendation to only reducing the company's capital, Arabian Pipes said in a statement to Tadawul.

The decision to amend the recommendation came as the deadline granted to listed joint stock companies with respect to the suspension of some provisions under the new Companies Law. The deadline ends on March 4, 2022.

Meanwhile, the company's capital increase request, submitted to the Capital Market Authority (CMA) on Dec. 5, 2021, is still under review, APC added.

The board recommended capital decrease by 75% to SAR 100 million from SAR 400 million, to offset accumulated losses.

There is no change in the appointment of the financial advisor, and FALCOM Financial Services remains the financial advisor for the capital reduction.

The capital reduction recommendation is subject to the approval of the official authorities the extraordinary general assembly.

In June, Arabian Pipes’ board recommended  capital decrease by 75% to SAR 100 million from SAR 400 million, followed by an increase of its capital through a rights issue worth SAR 300 million, Argaam reported.

It is noteworthy that Article 150/2 of the Companies Law has been suspended for a period of two years from March 25, 2020.

Meanwhile, Article No 150/1 of Companies’ Law provides that if the losses of a joint stock company reached half of its capital at any time during the company’s fiscal year, the company’s management or its auditor, as soon as they become aware of such losses, must inform the chairman of the board, who must directly inform the board. Within 15 days, the board must call an EGM to meet within 45 days to decide whether to increase or decrease the capital of the company so that the losses become less than half of the share capital of the company.

In case the EGM fails to convene within the period specified in the first paragraph, or if the shareholders fail to decide on the matter or if a capital increase process was approved, but the capital is not fully subscribed within 90 days of the EGM decision, the company shall be terminated by the force of law.

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