Tihama shareholders start e-voting on capital hike to fund expansions, support working capital

Tihama Advertising and Public Relations Co. announced starting today, Feb. 23, the electronic voting for shareholders of record, until the date of the upcoming extraordinary general assembly meeting, scheduled to be held on Feb. 26.

Shareholders will vote on the board's recommendation on increasing capital by 700% to SAR 400 million, through a SAR 350 million rights issue, which will go for financing expansion plans and future investments, as well as supporting working capital and paying financial obligations.

The company trimmed net loss after Zakat and tax to SAR 17.6 million in the nine months ended on Dec. 31, 2022, from SAR 29.2 million in the year-earlier period.  

Losses narrowed on the back of higher gross operating profit from retail, advertising and production segments. 

Tihama added that, when examining the cash position, there is a widening deficit compared to previous years, and this may indicate the natural growth achieved by the company and the accumulated old liabilities.

This also explains the company's request for capital in order to be able to continue its operating activities. In the event that the capital increase is not voted for, it may reflect negatively on the company's performance due to the existence of a cash deficit as announced in the market.

In a previous clarification, the company expected an improvement in its commercial activities and revenue growth next year, driven by the full operation of new branches in the retail segment, as well as the development of distribution segment operations, and the acquisition of new projects, in addition to the austerity plans that were initiated to reduce expenses. A large part of the plan is based on the use the proceeds from the capital increase.

The prospectus issued by the company shows using the capital hike proceeds in investment in the real estate sector in educational facilities, as well as expansion in the retail and education segments, in addition to investment in assets in the production segment, investment in Saudi movies, expansion in the advertising segment, in addition to the repayment of some of the company's obligations.