Zain Saudi Arabia, a subsidiary of Kuwait-based telco Zain Group, has announced that it is seeking approval for a 45.96% reduction in the company’s capital from SAR10.801 billion (USD2.88 billion) to SAR5.837 billion, with the total number of shares nearly halved to 583.729 million. According to the cellco, the principal reason for the proposed capital reduction – which will involve cancelling one Zain Saudi share for every 2.18 shares prior to the exercise – is to write-off all of the company’s accumulated losses up to 30 September 2014. The company explained that the accumulated losses may hinder its positive performance, following new rules introduced by the Capital Market Authority (CMA).
Zain Saudi Arabia CEO Hassan Kabbani commented: ‘The company is on a steady path in its implementation of its ambitious transformation plan, and we have already strengthened Zain’s position in the Saudi market by enhancing the performance, developing the network’s infrastructure, expanding sales channels and increasing point of sales.’ He added that the proposed capital reduction is a positive step in implementing a comprehensive development plan to strengthen the company’s position, stating that this will not affect Zain’s commitment to honour its obligations under its financing agreements. The proposed capital reduction is subject to obtaining all necessary regulatory and shareholder approvals.