Emaar EC announces financial restructuring plan

Logo of King Abdullah Economic City 

Emaar The Economic City (Emaar EC) announced its financial restructuring plan aimed at boosting its ability to move forward with growth plan, according to a Tadawul statement.

The plan includes bank facilities rescheduling, as the company signed a non-binding term sheet, on Sept. 7, to roll over its existing facilities with Alinma Bank, Saudi Awwal Bank (SAB), Banque Saudi Fransi (BSF), and Saudi National Bank (SNB).

The deal is to reschedule all the outstanding facilities worth approximately SAR 3.471 billion owed by the company to such banks. The terms will be consolidated under a single unified agreement. As part of the rescheduling, the banks will also provide the company with new credit facilities amounting to nearly SAR 301.4 million.

The restructuring plan also includes a new shareholder loan, as the firm signed, on Sept. 7, a non-binding term sheet with the Public Investment Fund (PIF) regarding a potential shareholder loan of up to SAR 1 billion.

This is, in addition to reducing the company's capital, as the board of directors decided today, Sept. 8 to reduce capital by SAR 5.63 billion, through cancellation of 563.12 million shares, or 49.69% of capital, to offset the accumulated losses as of June 30, 2024.

Additionally, the board of directors recommended, on Sept. 7, increasing capital through converting the PIF's SAR 3.97 billion debt to new ordinary shares.

This includes the liabilities and financial obligations owed to the fund under the shareholder loan agreement dated Feb. 19, 2023, and the debt novated from the Ministry of Finance (MoF) to the PIF on Sept. 5. The company also signed the related conversion agreement with the PIF on Sept. 7.

The capital reduction and increase are subject to the approval of regulatory authorities and the extraordinary general meeting (EGM). The term sheets with the banks and the PIF are non-binding and subject to the approval of the final binding agreements between the parties.

SNB Capital was appointed as a financial adviser for the capital reduction and debt conversion, while Khoshaim & Associates was named legal adviser for the restructuring plan.

The company will announce any significant developments in due course.