Alternative FRP to safeguard shareholders’ interests: Saudi Cable exec

The disseminated negative news about the company’s liquidation is baseless, given the company’s financial position and investments in associates, he added.

For more exclusive interviews 

The below are the details of the interview:

Q: What were formal and substantive errors discovered in the FRP?

A: The FRP was submitted by the former management to the trustee without the approval of the board of directors. In violation of the company’s bylaws, the trustee filed it to the Commercial Court in Jeddah. Therefore, the court cancelled the trustee’s decision to submit the FRP.

Additionally, the canceled proposal was based on capitalizing commercial debts and loans at the stock’s nominal value, while setting the stock’s value at SAR 10 apiece.

Meanwhile, the board did not approve any decisions regarding the determination of the stock price. This is also considered a violation of the authority of the company’s extraordinary general meeting (EGM).

Substantially, the cancelled procedure included incorrect financial data and unimplemented contracts, such as Rawafed Al-Mustaqbal Investment Co.’s SAR 110 million, which was deemed a fatal error that should have been detected by the trustee.

Q: The company was granted a grace period until July 1. What will the new proposal include?

A: The new proposal will guarantee the full payment of creditors' cash claims at a faster pace than the previous proposal while causing no harm to shareholders and providing cash capital to resume operations at the company’s Jeddah plant.

Q: What is the expected role of Saudi Cables' ownership in subsidiaries and associates to improve the company's financial position?

A:  There is significant room to mortgage or sell a portion of the company's stake in the associate if necessary to settle creditors' claims.

As per the published financial statements for Q1 2024, Saudi Cable reported a net profit of SAR 33 million from its share in the Bahraini associate, Midal Cables. Investors should note that the company is making a robust quarterly profit of at least SAR 30 million from its associate.

Q: How does the company plan to deal with its debt of SAR 770 million? Is there a plan to repay both rescheduled and mature debts?

A: A portion will be repaid immediately after the capital increase, and another portion will be restructured.

Q: Can you brief us on the company’s operating performance?

The company is working to secure a working capital to launch operations at Jeddah plant. It significantly relies on its stake in the Bahraini associate.

Q: How will the proposed capital increase support the company's future activities and enhance operating capacity?

The cash received through the SAR 400 million rights issue, profit share in the Bahraini associate, in addition to mortgaging or selling a stake in its associate valued at SAR 450 million will ensure the repayment of creditors’ claims and secure working capital to restore operations at Jeddah plant, thus achieving profitability.

The disseminated negative news about the company’s liquidation is baseless, given the company’s financial position and investments in associates.