CMA approves Emaar EC’s capital hike through SAR 2.83 bln debt conversion

Logo of Emaar The Economic City

The Capital Market Authority (CMA) approved Emaar The Economic City’s (Emaar EC) request on increasing its capital through SAR 2.83 billion debt conversion.

The approval is conditional on the company’s extraordinary general meeting (EGM) approval and completion of the necessary procedures concerning the applicable regulations.

A shareholders’ circular will be published clarifying reasons for the capital increase and its objectives within sufficient time before the EGM to enable shareholders to vote on the capital increase through debt conversion.

In May, Emaar EC board of directors recommended a capital increase by converting a loan owed by the company to the Public Investment Fund (PIF) worth SAR 2.83 billion.

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.

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.