CMA OKs MEPCO capital hike by offering shares

Logo of Middle East Paper Co. (MEPCO)

Middle East Paper Co. (MEPCO) obtained the Capital Market Authority’s (CMA) approval to increase its capital through issuing about 20 million shares and suspending preferential rights worth SAR 630 million.

The share offering is limited to investor categories as per securities offering rules, with details in the upcoming prospectus, CMA said in a statement.

The extraordinary general assembly shall be held within six months from this approval date and the company shall satisfy all regulatory requirements and applicable laws, said the regulator.

Following a review against regulatory and issuer standards for capital increases, the CMA approved the request. A detailed prospectus on suspending preferential rights will be published later.

Shareholder decisions on capital increases, suspending preferential rights, depend on the issuer's announcement or the Authority's approval of the related prospectus

CMA highlighted the high risk of voting on capital increases without studying the prospectus, which contains crucial information. It advises consulting a financial advisor if the prospectus is unclear.

The CMA's approval of the prospectus is a regulatory compliance indicator, not an investment feasibility endorsement.

MEPCO submitted a capital increase request last September, intending to raise it from SAR 666.67 million to SAR 866.67 million without preferential subscription rights, according to data compiled by Argaam.

MEPCO's May memorandum with the Public Investment Fund involves the Fund subscribing to new shares at SAR 31.50 per share, representing a significant minority stake.