Bawan subsidiary to sell entire stake in Utec Algeria for SAR 30 mln

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Bawan Company’s 85.5%- owned subsidiary, United Transformers Electric Company Ltd. (Utec Saudi), signed a contract with Algeria-based Industry Technology Electric Co. to sell its entire 49% equity stake in Utec Algeria for $8 million (SAR 30 million), according to a bourse filing today, Jan. 31.

The deal is conditional to regulatory approvals from relevant authorities.

The two parties have agreed that the effective date of the shares sale contract will be Dec. 31, 2020.

The sale will generate an approximate estimated capital gain for Utec Saudi of SAR 4.2 million, of which Bawan’s share will be SAR 3.6 million approximately.

The total impact of this sale on Bawan will be a comprehensive profit of SAR 1.5 million, after foreign currency translation balance of SAR 2.1 million.

The financial impact is expected to appear during Q1 2021.

Utec Algeria is engaged in the designing and manufacturing of various types and capacities of electrical transformers, the statement said.

The net book value of Utec Algeria as of Dec. 31, 2020, was SAR 25.8 million, including the direct loans granted from Utec Saudi of SAR 20.3 million.

Bawan’s share in the net losses of Utec Algeria was SAR 4.2 million in 2020, SAR 1.5 million in 2019, and SAR 0.9 million in 2018.

In December 2014, Bawan’s board of directors approved that Utec Saudi to establish and manage an industrial limited liabilities company in Algeria under the name of Utec Algeria (United Technology Electric Co.) with a capital of approximately SAR 37 million.

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