Riyadh, 9 September 2024 (TDI): A SR8.7 billion ($2.32 billion) capital optimization plan aimed at revamping its financial framework was revealed by King Abdullah Economic City’s developer, Emaar The Economic City, a Saudi master developer.
As per a news release, the board approved the restructuring of SR3.8 billion in bank obligations, the conversion of SR4 billion in debt owing to the Public Investment Fund into equity, and the introduction of an SR1 billion convertible shareholder facility from PIF.
In order to stabilize EEC’s financial situation and pave the way for long-term value development, the strategy also calls for a capital decrease to offset accumulated losses.
This occurs at the same time that Emaar Economic City is sharpening its focus on important industries, such as real estate, tourism, and industrial and logistics.
The goals of Saudi Arabia’s Vision 2030 will be furthered by the Special Economic Zone, known as KAEC, which is expected to draw more companies and inhabitants.
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Emaar The Economic City chairman Fahad Al-Saif stated: “The Company will be able to take advantage of opportunities to align its direction with Saudi Vision 2030 thanks to the implementation of the COP, which supports EEC’s Board-approved strategy.”
A single syndicated facility that complies with Shariah will be created by combining bilateral lending facilities from lenders such as Alinma Bank, Saudi Awwal Bank, Banque Saudi Fransi, and Saudi National Bank.
The CEO of EEC, Abdulaziz Ibrahim Al-Nowaiser, stated, “Our balance sheet is strengthened by this well-thought-out approach, which also paves the way for us to take advantage of opportunities faster.
As we conduct the strategic rebalancing of our financial framework, our goal is clear: to improve our leverage ratios and bolster overall financial health.”
He further elaborated that the business is assessing a number of functional and structural initiatives with the dual goals of bolstering crucial connections with stakeholders and bringing EEC back to complete financial health.
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It also intends to update its “long-term strategy to establish a clear roadmap” on a regular basis in order to revive the company’s capacity to carry out its primary goals of managing the property and producing wealth for shareholders.
King Abdullah Port, a significant maritime hub, is anticipated to propel expansion, and KAEC’s infrastructure initiatives, which include several hotel endeavors and a new stadium, are intended to increase the city’s attractiveness as a travel and business destination.
EEC advanced the company’s efforts to turn things around in the first half of 2024 by luring investors and putting cost-cutting measures in place.
SNB Capital is the financial advisor for the debt conversion and capital reduction, while Moelis & Co. provides independent advice on debt restructuring, according to the announcement.
