Mobile operator Zain’s Saudi subsidiary has announced plans to raise SAR 6bn (US$1.6bn) through a rights issue as part of a new capital restructuring programme.
Before the rights issue, Zain Saudi Arabia (Zain KSA) intends to reduce its paid-up…
Mobile operator Zain’s Saudi subsidiary has announced plans to raise SAR 6bn (US$1.6bn) through a rights issue as part of a new capital restructuring programme.
Before the rights issue, Zain Saudi Arabia (Zain KSA) intends to reduce its paid-up capital from SAR 14bn (US$3.73bn) to SAR 4.801bn (US$1.28bn), a 66% reduction. Following the rights issue, the group expects its paid-up capital will stand at SAR 10.801bn (US$2.88bn).
According to the company, the rights issue, which is subject to regulatory approval, will consist of raising fresh equity and the capitalisation of its subordinated shareholder loans. The mobile operator will use the fresh equity to reduce bank debt, enhance the quality of the group’s existing network and expand its recently launched 4G LTE infrastructure.
Earlier this month, on 11 October, Zain KSA announced the appointment of former Zain Kuwait CEO Khalid Al-Omar as its CEO, replacing Saad al-Barrak.
Barrak, as a former CEO of Zain Group, is credited for being the driving force behind the telco’s rapid growth over the past decade, but recently is has appeared to be scaling back its expansion plans.
Commenting on the capital restructuring, Zain Group CEO Nabeel Bin Salamah said: “Zain KSA stands on the threshold of an exciting new dawn in the Saudi Arabian mobile telecom sector and this capital restructuring and rights issue will strengthen the financial position and ensure the long-term viability of the company.
“The relationship between Zain KSA and Zain Group will be stronger and the opportunities to achieve genuine synergies will become apparent with a new management team. Zain KSA will be transformed, allowing the company to deliver the very latest network technology and exciting broadband product offerings to all our customers.”
Bin Salamah added: “We have decided to take a vigorous approach towards Zain KSA and to make it a key pillar of Zain Group’s focus. The combination of a new management team, an ambitious investment plan and new financial structure will have a positive impact on the performance of the company and create value for all its stakeholders. We have every confidence in the future prosperity of Zain KSA as the company is operating in a vibrant economy of which the mobile telecom sector is a key driver.”
