SIDC issues shareholders' circular on capital reduction

Logo of Saudi Industrial Development Co. (SIDC)

Saudi Industrial Development Co. (SIDC) issued the shareholders' circular for its 66.25% capital cut, according to a statement to Tadawul.

 

The company announced, on July 17, the approval of the Capital Market Authority (CMA) on its request to cut capital from SAR 400 million to SAR 135 million, thus reducing the share capital from 40 million to 13.5 million.

 

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Shareholders are set to vote on cutting the company’s capital by 66.25%, or SAR 135 million, during the extraordinary general meeting (EGM) that will be held on Aug. 27, as the following table illustrates:

 

Capital Reduction Details

Current Capital

SAR 400 mln

Number of Shares

40 mln

New Capital

SAR 135 mln

Number of Shares

13.5 mln

Percentage of Reduction

66.25% (0.6625 per share held)

Reason

Restructuring capital to offset accumulated losses

Date

Aug. 27, 2024 (Shareholders registered with Edaa at the end of the second trading day following the EGM date).

Method

Writing off 26.5 mln shares

 

The company said it intends to take the following corrective steps:
 
-  Improve production efficiency by enhancing production process flow and training employees on implementing best practices in production and maintenance.
 
- Rationalize costs by reviewing contracts and agreements with suppliers to obtain better terms and searching for lower-cost alternatives for raw materials.
 
- Increase revenues by introducing new products or developing existing products to meet market needs.
 
-Effectively manage inventory through implementing advanced inventory management systems.
 
-  Develop the Company’s Enterprise Resource Planning (ERP) system and automate its operational processes.
 
- Develop the administrative and organizational structure and attract qualified national competencies.
 
Moreover, the company's board of directors’ recommendation to reduce capital included a recommendation to increase the capital, so that the proceeds from the rights issue will be used to enable the Company to implement its operational plans, support working capital, and strengthen the Company’s financial position.
 
The Company will collect any fractional shares (if any) in one portfolio resulting from the capital reduction process and then sell them in the market at the prevailing price at the time. Then, the proceeds of their sale will be distributed to the company’s shareholders, each according to their ownership, within thirty (30) days from the date of shareholders’ approval in the EGM on the company’s capital reduction.

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