Petro Rabigh board recommends 13.76% capital decrease, SAR 7.95 bln rights issue

Logo of Petro Rabigh

Rabigh Refining and Petrochemical Co.’s (Petro Rabigh) board of directors changed, on Dec. 6, its 2015 recommendation to increase capital through a rights issue, to capital decrease followed by a rights issue.

The decision came after the board of directors’ studied the company’s financial position and its accumulated losses that stand at 13.76% of capital.

Accordingly, the board recommended 13.76% capital decrease from SAR 8.76 billion to SAR 7.55 billion, as shown in the following table:

The move will help offset accumulated losses, Petro Rabigh said in a statement to Tadawul, expecting no material negative impact on its liabilities, operations, or its financial, operating, or organizational performance.

The company’s capital will be reduced by the close of trading on the second day following the date of the extraordinary general assembly meeting (EGM), which will decide on the capital reduction process.

Elsewhere, the board of directors recommended capital hike through SAR 7.95 billion rights issue to strengthen the company’s equity and slash its liabilities.

Eligibility will be to shareholders on the date of the EGM that will approve the capital hike, who are registered with the Securities Depository Center (Edaa) at the end of the second trading day following the EGM date.

The approval of the EGM on the rights issue is conditional on the approval on the proposed capital reduction.

Petro Rabigh is currently finalizing the related paperwork and will disclose more details later upon submitting the capital reduction application to the Capital Market Authority (CMA).

It is currently difficult for the company to specify the expected date to complete the capital reduction and capital increase processes, given that both transactions are subject to regulatory approvals.

Saudi Arabian Oil Co. (Saudi Aramco) and Sumitomo Chemical Co. Ltd. will subscribe on a pro rata basis to the capital increase through capitalizing part of the due owed to them by Petro Rabigh. This structuring process is subject to regulatory approvals, mainly by the CMA and the company’s EGM. All relevant details will be disclosed in the prospectus, as required by applicable rules.

Petro Rabigh earlier hired HSBC Saudi Arabia as financial adviser for the rights issue, as announced on Dec. 28, 2016. It was appointed HSBC Saudi Arabia as financial adviser for the capital reduction. Khoshaim & Associates was hired as legal advisor for the transactions.

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