Zain Saudi amends capital cut, rights issue recommendations

Mobile Telecommunications Co. Saudi Arabia’s (Zain Saudi) board of directors amended its recommendation to cut capital by 28% instead of 38% previously, the company said in a statement to Tadawul.

The capital will be reduced to SAR 4.23 billion from SAR 5.84 billion

The capital cut will take place through writing off 160.81 million shares to offset accumulated losses of SAR 1.608 billion.

Following the capital cut, the company plans to increase its capital through a SAR 4.5 billion rights issue instead of the previous recommendation of SAR 6 billion to SAR 8.73 billion.

Both decisions are pending approvals from the company’s general assembly and regulatory bodies including the Capital Market Authority (CMA).

The telecom operator expects the planned capital restructuring and rights issue to pave the way for dividend distribution after offsetting all accumulated losses. In addition, fresh liquidity will be used to cut the company’s debts.

The capital restructuring is likely to improve Zain Saudi’s financial performance, profitability and leverage ratios, the statement added.