Red Sea revises debt conversion for capital increase

Logo of Red Sea International Co.

Red Sea International Co. said the amount entailed under its debt conversion plan for its capital increase has been amended to capitalize SAR 476.02 million in debt (the capital hike) instead of SAR 374.23 million formerly, according to a Tadawul filing today, April 1.

This will be come after the related parties agreed to revise the final consideration for the acquisition of Fundamental Installation for Electric Work Co. Ltd. (First Fix) and set at SAR 644.8 million, bringing the debt owed to the selling parties in the takeover deal to SAR 394.80 million. This besides converting SAR 81.23 million worth of debt owed to Al-Dabbagh Group.

The company's board of directors had previously recommended, on Aug. 3, 2023, increasing capital through converting SAR 80.23 million worth of debt owed to Al-Dabbagh Group, as well as capitalizing SAR 294 million debt that will result from acquiring First Fix, according to Argaam's data.

The changes, subject to certain reviews in the closing accounts under the sale and purchase agreement signed earlier by the related parties, will result in an increase in the total amount to be converted to equity by about 27% over the previously announced amount, according to the company.

Red Sea also indicated that the debt conversion is expected to improve and solidify its financial position, and further improve its financial indicators to enhance its ability to achieve its growth objectives.

Furthermore, the capital increase by debt conversion will neither result in any financial liability nor require any cash contribution by the company’s shareholders.