Al-Khodari to increase capital via SAR 1.83 bln debt-to-equity swap under financial reorganization plan

07/07/2021 Argaam

Logo of Abdullah A. M. Al-Khodari Sons Co.


Abdullah A. M. Al-Khodari Sons Co. disclosed the highlights of its financial reorganization plan, which was accepted by the Commercial Court in Dammam, according to a bourse statement.

 

The proposal includes increasing the capital by converting the debts of all categories of creditors into shares of SAR10 each, bringing the new capital to SAR 2.38 billion.

 

It further requires all creditors, except employees, to contribute SAR 3 per share, which will generate SAR 512 million in cash. This amount will be recorded as part of shareholder’s equity in the company’s books.

 

The increase in capital from debts conversion and cash contribution will be utilized to absorb the accumulated losses.

 

The company’s capital will be reduced by 92.11% to SAR 188 million to offset the accumulated losses and reduce it to less than 50% of capital as required by the Companies Law.

 

Currently, it is difficult to determine the financial impact and developments resulting from the financial restructuring procedures.

Any impact will be disclosed in due course.

 

According to the statement, the board of directors did not find any financial reorganization proposal available with the company at the time of its appointment. Therefore, the board was keen to make a proposal, which considered the worst future possibilities to protect the company from any default that may arise and cause the proposal to fail.

 

There are no other solutions with the board other than what has been provided and will be the last chance for creditors and shareholders to protect the company.

 

Financial Reorganization Plan

Current Capital

SAR 557.81 mln

Debt-to-Equity Conversion

SAR 1.83 bln

New Capital

SAR 2.38 bln

Cash Support Provided By Creditors*

SAR 512 mln

Capital Reduction Ratio to offset accumulated losses

92.11%

Capital After Reducing Accumulated Losses

SAR188 mln

*Part of shareholders’ equity in company books

 

On July 6, Al-Khodari announced that the Commercial Court in Dammam accepted, on July 1, its proposed financial reorganization plan.

 

The court set Aug. 1 and Aug. 4 as dates for shareholders and creditors’ voting on the proposal, respectively.

Comments {{getCommentCount()}}

Be the first to comment

loader Train
Sorry: the validity period has ended to comment on this news
Opinions expressed in the comments section do not reflect the views of Argaam. Abusive comments of any kind will be removed. Political or religious commentary will not be tolerated.