Chemanol recommends capital hike through SAR 550.5 mln rights issue

Logo of Methanol Chemicals Co. (Chemanol)

Methanol Chemicals Co.’s (Chemanol) board of directors on Monday, Aug. 9, recommended increasing the company’s capital through rights issue of SAR 550.50 million, according to a bourse statement.

The company aims to use the funds to finance and implement its future plans and projects, expand its activities and raise levels of domestic investments.

Chemanol obtained the Ministry of Energy’s approval for allocating the required feedstock to expand the methanol plant in order to increase its output by around 100,000 tons. Such an increase will contribute to reduced production costs and raise financial revenues.

Furthermore, the expansion of methanol plant will let the company start its future projects, as announced on March 2, 2020, to align with the growth and economic changes in the Kingdom under Vision 2030.

The firm also seeks to raise its financial solvency and decrease the borrowing rates and the costs incurred thereof.

Shareholders of record on the date of the extraordinary general assembly meeting (EGM), during which the decision to increase capital is approved, are eligible, in addition to those registered at the Securities Depository Center Co. (Edaa) at the end of the second trading day following the meeting.

The capital hike is pending approval from the EGM and related regulatory authorities.

Wasatah Capital has been appointed as the financial advisor for the offering.

In June, Chemanol’s board rejected increasing the capital through a SAR 480 million rights issue, and approved a 44% capital cut to SAR 674.51 million from SAR 1.21 billion to restructure the company’s capital and offset accumulated losses, according to data compiled by Argaam.

Later, the company announced that its accumulated losses dropped to zero as of June 28.