Amiantit unveils rationale for creditor bank agreement

Logo of Saudi Arabian Amiantit Co.

Saudi Arabian Amiantit Co. explained the main reason for signing an agreement with one of the local creditor banks on Dec. 31, 2023.  

The deal will settle all its outstanding amounts, totaling SAR 572.7 million, to the bank in exchange for transferring its entire stake in its wholly owned subsidiary, International Infrastructure Management and Operation Co. (Amiwater), to a bank-affiliated investment fund.

In a statement to Tadawul, Amiantit detailed the expected financial impacts on the company and its operations.

The company expects an accounting profit of SAR 482.5 million. This sum comprises SAR 417.4 million, resulting from the difference between the financial obligations due from Amiantit to the bank and the book value of the relinquished Amiwater at SAR 155.3 million as of the agreement date.

An amount of SAR 65.1 million is anticipated from reversing the hedge reserve against interest rate and/or foreign currency risks related to the investments of the relinquished company.

By signing the agreement, the company aims to maximize ownership rights for shareholders and improve the return per share.

The agreement is also expected to reduce approximately 50% of the total financial obligations owed by the company to the banks.

The financial impacts include reducing the Zakat base in the upcoming years to the Zakat, Tax, and Customs Authority (ZATCA) regarding the loans item.

The agreement is anticipated to reduce the company’s cash outflow as repayment for the loan and enhance its operations through these savings.

Extinguishing the total accumulated losses and converting them into retained earnings is expected to strengthen Amiantit’s financial position, addressing the concerns raised in the auditor's report for the third quarter of 2023 regarding the company's continuity principle.

The statement further indicated that the book value of the relinquished Amiwater is SAR 155.3 million as of the agreement date, including SAR 65.1 million as a hedge reserve against interest rate and/or foreign currency risks related to the investments of the relinquished company.

During the last three financial years, the relinquished company incurred a net loss of approximately SAR 82 million for 2020, a net loss of around SAR 63 million for 2021, and a net profit of about SAR 10 million for 2022, the statement added.

The company emphasized that there are no proceeds from this agreement and will not result in any cash inflow. There are no related parties involved in the deal.

According to data available on Argaam, Amiantit signed on Dec. 31, 2023, a settlement agreement with a local creditor bank to transfer its entire stake in Amiwater to a bank-affiliated investment fund. In return, the bank exempted the company from all its obligations, amounting to SAR 572.7 million.