Emaar EC signs binding amendment, restructuring pact with PIF

Logo of Emaar The Economic City’s (Emaar EC)

Emaar The Economic City (Emaar EC) signed, on March 18, a binding amendment and restructuring agreement to its existing shareholder loan agreement with the Public Investment Fund  (PIF), in order to secure a loan of up to SAR 1 billion.

According to a statement to Tadawul, Emaar EC pointed out that the agreement was made by amending and restructuring the existing shareholder loan agreement, signed on Feb. 19, 2023, with the PIF, which pertains to a previous loan of SAR 1 billion that was fully utilized.

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The loan tenor will extend for 18 months from signing the amendment and restructuring agreement. Repayment will be made in a lump sum on the day that marks 24 months from the date of the agreement, including the principal amount and commission.

The loan is covered by real estate mortgages valued at no less than SAR 1.5 billion, in addition to issuing promissory notes covering the principal amount and commission, the statement added.

The pact includes an option for the PIF to convert the outstanding amount under the shareholders loan to shares, subject to approvals of the relevant regulatory authorities and the company’s shareholders.

Emaar EC said that the conversion formula has been agreed upon.

The PIF is considered a related party, as it is one of the major shareholders in the company.

The loan is intended to cover capital expenditure and project costs. The signing of the amendment is part of the company's financial restructuring plan, aimed at strengthening its financial and operational stability and restructuring its capital to support its growth plans.

According to data available with Argaam, Emaar EC announced inking a non-binding term sheet, on Sept. 7, with the PIF on a potential shareholder loan at SAR 1 billion maximum.

Pursuant to the term sheet, both parties agreed to negotiate the loan and agreed on the preliminary provisions.

The parties also agreed that the shareholder loan would include an option for the PIF to convert the outstanding amount to shares, subject to the approvals of the relevant regulatory authorities and shareholders.