Al Sorayai chairman says voting on capital cut ‘best option’ to offset losses

Al Sorayai Trading and Industrial Group deems that shareholder vote on a capital cut ahead of increasing capital at a later stage is the best option to offset accumulated losses, board chairman Abdulaziz bin Nasser Al-Sorayai told CNBC Arabia on Wednesday.

“Time is ripe now for this vote,” Al-Sorayai stated.

He also said that Al Sorayai’s accumulated losses exceeded 50 percent of capital amid weak sales, high costs and suboptimal utilization of production capacity. 

In addition, the implementation of the International Financial Reporting Standards (IFRS) had an impact of SAR 15 million on the group’s H1 2019 financial results, he added.

Al Sorayai also reported a total inventory of nearly SAR 200 million in the same period.

“The group has reached a settlement with banks for its status. Long-terms loans account for the majority of Al Sorayai bank debts,” the chairman said.

The Tadawul-listed trading firm signed a deal with the Ministry of Finance under the corporate sustainability initiative. 

Under the deal, the group will get a financial support of SAR 90 million to enhance its own resources, of which SAR 30 million have been already received.

Al Sorayai would be facing termination under the Saudi Companies Law if it fails to hold an extraordinary general assembly meeting within 45 days from the date its board of directors was informed of losses which is Sept. 4, or if shareholders fail to pass a resolution. 

Related: Al Sorayai faces termination if EGM not held by Sept. 4