Emaar EC's capital restructuring targets financial stability, better investment in growth projects: CEO

Abdulaziz Alnowaiser, CEO of Emaar The Economic City (Emaar EC)

Emaar The Economic City's (Emaar EC) capital restructuring plan aims to achieve an improvement in liquidity and reduce debt levels and interest expenses in the short and medium term, CEO Abdulaziz Alnowaiser told Argaam in an interview.

It also targets enhanced financial stability and better positioning for investment in growth projects in the long term, which shall in turn benefit shareholders, he added.

The CEO explained that the debt conversion of SAR 4 billion into capital shares is a positive step and a key pillar of the financial restructuring plan.

The debt conversion will significantly reduce the company’s debt balance, which will ease the financial burdens represented in borrowing costs, hence boosting cash liquidity and enabling funding long-term transformation and growth plans, while fulfilling its credit obligations.

This is in addition to reducing the debt-to-assets ratio and net shareholders’ equity, which will positively reflect on Emaar EC's financial position, according to the top executive.

Alnowaiser underlined that the debt conversion process is still subject to reaching a final binding agreement, followed by the approval of regulatory authorities and shareholders.

Meanwhile, the new loan, which will be secured immediately after the signing of the binding agreements with the relevant authorities, will help provide the necessary cash liquidity to finance the vital and transformative growth initiatives on which the company’s financial restructuring plan is based on.

“This bodes well for Emaar EC's operational and financial performance. It shall also enable us to achieve its strategic goals in the short, medium and long terms,” said the CEO.

He added that the interest due on the Ministry of Finance loan was factored in the debt reassignment to the Public Investment Fund (PIF), noting that a non-binding agreement was signed with the fund to convert this debt into capital after reaching the final binding agreement before obtaining the approvals of the regulatory authorities and the general assembly.

Alnowaiser also indicated that the company's capital reduction will not take a toll on its current operations. The move is rather aimed at amortizing accumulated losses, thus enhancing financial stability and greatly improving the balance sheet.

According to data available to Argaam, Emaar EC announced its financial restructuring plan aimed at boosting its ability to move forward with growth plan.