Al Kathiri has multi-tranche sukuk program, SAR 75 mln current contracts: CEO

Meshal Alkathiri, CEO of Al Kathiri Holding 

Al Kathiri Holding Co. has a multi-tranche sukuk program, and the current issuance represents the first tranche at a total value of SAR 100 million, with a fixed return of 8.5% annually, CEO Meshal Alkathiri told Argaam.

He added that Al Kathiri offered an attractive return on the first tranche, given that it is the company's first issuance amid the current market conditions and high interest rates.

The firm will invest 60% of the first tranche proceeds in the real estate sector, the top executive said.

Noting that the company owns a building technology factory, the CEO said, "We will make use of the company's production capacity to support the reduction of construction costs by 25-30%, which will help us offer low-cost housing products."

He added that 40% of the first tranche proceeds will be used to support the company's core segments, concrete and transportation, which will help the firm reach its targets at the earliest.

The CEO referred to Al Kathiri's ability to use the offering proceeds in projects that will generate revenues and profits exceeding the cost of sukuk. This will also boost the company's resilience to pay the sukuk expenses and capital at the end of the period.

Commenting on financial results, the top executive said the sales volume of the concrete plant doubled, which was reflected in the growth of revenues. He pointed to the operation of all concrete plants in Al Jawan suburb project, Al-Narjis district, north of Riyadh.

Demand for raw materials increased due to the launch of major projects and implementation of projects, which contributed significantly to the improvement in the prices of cement, concrete and gravel.

The Tadawul-listed firm has operating contracts worth SAR 75 million, of which the ready-mixed concrete plant dominates SAR 60 million. It also has SAR 11 million worth of operating contracts in the contracting sector, and more than SAR 3 million for the building technology factory, the CEO concluded.