Saudi Printing, Alinma Bank ink deal for debt settlement, capital hike via debt conversion

Logo of Saudi Printing and Packaging Co.

Saudi Printing and Packaging Co. signed today, Nov. 5, an agreement to settle all of its SAR 178.1 million outstanding debts owed to Alinma Bank through the ownership transfer of two land plots and issuance of new shares in favor of Alinma Bank by increasing the former’s capital.

In a statement to Tadawul, the company indicated that the debt settlement is expected to enhance its liquidity ratios, financial indicators, and growth capacity.

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The agreement entails the below:

1-The company agreed with Alinma Bank to settle SAR 110 million through the transfer of two land plots, spanning a total area of 122,327 square meters in Al Manarat District, Jeddah, in favor of the latter. Saudi Printing will bear the real estate transaction tax of SAR 5.5 million.

2-The company and Alinma Bank agreed to settle the remaining amount of SAR 73.6 million (including the real estate transaction tax mentioned above) through the issuance of new shares in Saudi Printing to Alinma Bank, as per the terms of their agreement. The respective capital rise will not require any financial contributions from existing shareholders.

The issuance of new shares is subject to the fulfillment of the following principal conditions and terms: Obtaining necessary regulatory approvals, specifically from the Capital Market Authority (CMA) and Tadawul, for issuing and listing the new shares; obtaining any required approvals from third parties whose consent is necessary for the execution of the proposed transaction; and the go-ahead of Saudi Printing’s extraordinary general meeting (EGM) on the move.

This deal is mainly aimed to settle all Saudi Printing’s financial liabilities owed to Alinma Bank, thereby improving the former’s financial position and reducing financing costs (FCs).

The related financial impact is expected to appear in 2025. The projected impact on the company and its operations is as follows:

1-Lower FCs.

2-Reduction in the loan balance by SAR 178.1 million, representing 22.7% of the SAR 784 million total as of the end of Q3 2024.

Trimming the company’s debts and financing burdens will result in strengthening its financial solvency, while also improving its leverage ratios and overall credit score.

There will be no inflows or cash proceeds resulting from this agreement, with no related parties involved.

Details of the specific terms and conditions of the agreement will be provided in a shareholders’ circular, which will be published after obtaining the necessary regulatory approvals.

The company will announce any future developments in due course.

In a separate statement to Tadawul, Saudi Printing said its board of directors recommended increasing capital by converting debt owed to Alinma Bank into new ordinary shares in favor of the latter.

This capital top-up will not require any financial contributions from existing shareholders.

The total debts the company intends to convert into equity amounted to SAR 73.6 million.

The approvals on the capital increase through debt conversion must be obtained from regulatory authorities, relevant third parties, and the company’s EGM.

EFG Hermes KSA has been appointed as financial advisor on the capital increase application through debt conversion. Saudi Printing said it will make announcement of filing with the CMA for its no-objection on the planned transaction.