Zain Saudi board amends capital cut recommendation to 23%

The board of directors of Mobile Telecommunications Co. Saudi Arabia (Zain Saudi) today decided to amend its recommendation to cut capital by 23% from previously-announced 28%, the company said in a statement to Tadawul.

The company said in a statement on Tadawul that the decision comes after improvement in operations and ability to reduce accumulated losses from around 28% to 24.7%.

The capital reduction will become effective at the end of the second trading day after the extraordinary general meeting (EGM).

The percentage of ownership of each shareholder will not change due to the capital reduction and will not have any effect on the company’s existing obligations or operations.

Following the capital cut, Zain Saudi plans to increase its capital through a SAR 4.5 billion rights issue.

The capital reduction and rights issue is expected to pave the way for dividend distribution after extinguishing the majority of accumulated losses, in addition to the injection of additional fresh cash, which will be used to reduce debt; therefore result in significant interest savings.

The capital restructuring is expected to improve the financial performance, profitability and leverage ratios, the statement noted.

The decisions are pending approvals from the EGM after obtaining the necessary approvals, the statement added.