Emaar EC plans capital hike through PIF’s loan conversion of SAR 2.83 bln

Logo of King Abdullah Economic City

Emaar The Economic City Co.’s (Emaar EC) board of directors recommended on May 5, 2021, a capital increase through converting a loan owed by the company to the Public Investment Fund (PIF) in the amount of SAR 2.83 billion.

The debt conversion is aimed to improve the company’s liquidity and credit position and enhance its ability to achieve its growth objectives, the company said in a bourse statement.

The capital hike will not result in any financial liability on or require any cash contribution by the company’s shareholders, the statement added.

The process is subject to obtaining official approvals as well as the extraordinary general assembly’s approval prior to increasing its capital through debt conversion.

In a separate statement, Emaar EC said it appointed Saudi Fransi Capital as financial advisor to manage its application to increase capital through debt conversion.

The company will announce when such application is submitted to the Capital Market Authority (CMA) for approval.

On Aug. 31, 2020, Emaar EC announced it entered into a share subscription agreement, under which the Ministry of Finance (MoF) will transfer part of the loan due to the ministry – following the loan agreement with MoF on May 23, 2011, and amended on June 4, 2015 – to PIF for a total amount of SAR 2.83 billion, according to data compiled by Argaam.

Following the subscription agreement, PIF will enter as an investor in the company through issuance of 283.33 million new shares in the company, at the nominal value of SAR 10 per share, against the entire debt owed by the company to PIF pursuant to the novation.