Saudi Chemical unit hikes capital by 50%, followed by reduction to offset losses

Saudi Chemical Holding Co. said that its subsidiary, AJA Pharmaceutical Industries Ltd. (AJA Pharma), will restructure its capital through a hike of 50% from SAR 200 million to SAR 300 million as a first stage to address losses.

This will be followed by a capital cut in a second stage to offset accumulated losses in line with the relevant regulations.

The capital restructuring aims to enhance and strengthen the financial position of the subsidiary, the company said in a bourse statement.

The capital was increased by capitalization of existing payable of Saudi Chemical to its subsidiary according to Article B/138 of the Companies Law through current accounts between the two companies.

The increase in the capital was approved by the board of directors on June 30.

The financial impact will be reflected during the second quarter of 2021.

The capital cut will have no impact on commitments or financial, operating or organizational performance of the company.

It is expected to have a positive impact on shareholders’ equity and performance indicators.

AJA Pharma is 95% owned by Saudi Chemical Holding and 5% by Chemical Commercial Investment Co. Ltd, which is one of Saudi Chemical’s subsidiaries.