Trading in Nama Chemicals suspended as losses mount

The Saudi Stock Exchange has suspended trading in Nama Chemicals Co. for one session following the company’s announcement on Wednesday that its accumulated losses have reached SAR 977.7 million, accounting for 76.1 percent of its capital.

Meanwhile, the board of directors of Nama on Tuesday approved a proposal to write down the value of the company’s assets by SAR 655 million, it said in a statement to Tadawul on Wednesday.

The company which produces epoxy and caustic soda products, incurred gross losses over 2014 and 2015, implying fixed asset impairment. It had hired an international advisor to revise the book value of its fixed assets to determine whether it has incurred losses due to a drop in their value.

Meanwhile, the board has also recommended an 81.7 percent capital reduction to SAR 235.2 million from about SAR 1.3 billion, as it restructures in line with the new corporate regulations.

It will cancel 105 million outstanding shares to reduce capital (1.2 shares for every outstanding share), subject to regulator and shareholder approval.  

The company’s profit margins were hurt by lower prices, global oversupply and a decrease in euro exchange prices. The imposition of a 6.5 percent fees on Saudi exports to Europe also led to a drop in the production capacity of Nama’s epoxy resins plant.

Nama added that the financial impact is expected to show on Q4-2016 financial results.