Saudi Steel Pipes’ Affiliate Requests Liquidation

A Chemical Development Company, a closed joint stock company and one of the associate companies of the Saudi Steel Pipes Company, with a 20% stake, filed a request to open a liquidation procedure with the First Commercial Circuit of the Commercial Court, in Dammam, but the court denied the request, due to an imbalance in one of the conditions for opening a liquidation procedure, Maaal reported.

The has broken the criterion that the value of its realized assets does not cover the costs of the liquidation operation, as the remaining assets are just SR39,371, according to the statistics.

The Chemical Development Company has assets in its associate firms, but it is unable to liquidate the value of those assets, due to its partner companies’ financial difficulty.

The first asset is a SR237.79 million investment in the Renewable Energy Firm (an associate company), which has spent the majority of this money in the Polysilicon Technology Company (a sister company) to build a factory in Jubail, currently experiencing financial hardship.

The second asset is a loan of SR26.25 million to the Polysilicon Technology Company, which is now experiencing financial difficulties, too.

As a result, the Chemical Development Company’s total assets are currently only SR39,371. The remaining assets are receivables with other parties, which are impossible to recover, especially since whoever owns these receivables, according to the Chemical Development Company, is undergoing financial trouble.

According to Saudi Steel Pipes Company ” Saudi Steel Pipes ” financial statements, the total investment value of the Saudi Steel Pipes in the Chemical Development Company is SR67.95 million.

However, during the fourth quarter of 2017, the Board of Directors of ” Saudi Steel Pipes” determined that the investment value was not recoverable, and the entire value of the investment was written off from its financial statements.

2016 and 2017 were two of the most productive years in the company’s history.
The Higher Education Fund owns 16.4% (4.92 million shares), Olayan Financial Company 13.4%, Suhail bin Abdulmohsen Al-Shuaibi and Sons Holding Company by 8.8%, and Abdullah Al-Hamad Al-Sager and Brothers Company (Kuwait) by 8.5 percent, as well as 19 investors who own 32.9% of the company’s capital.

The Chemical Development Company is a company that develops, builds, and operates industrial projects in the chemical and renewable energy industries.

The following table shows the major shareholders of the Chemical Development Company:
Owner Percent Number of Shares (Million Shares)
Saudi Steel Pipes 20.00 6.00
University Higher Education Fund 16.40 4.92
Olayan Financial Company 13.40 4.02
Suhail Bin Abdul Mohsen Al Shuaibi & Sons Holding Company 8.80 2.64
Abdullah Al-Hamad Al-Sager and Brothers Company (Kuwait) 8.50 2.55
19 investors 32.90 9.87
Total 100.00 30.00

Stages of “Saudi Steel Pipes” entry into the investment:
On Wednesday, August 17, 2011, Saudi Steel Pipes Company (SSP) announced that it had entered as a partner in the Chemical Development Company (a closed Saudi joint stock company) to participate equally with Saudi partners in the Renewable Energy Company to implement the Polysilicon Technology Company Ltd.
Project to produce polysilicon, which is used in the electronics industry, and photovoltaic cells, which are used to generate electricity from solar energy, are few among a wider bundle of other products.

This factory, which is being built in Jubail Industrial City, cost around SR2000 million to build and will begin production in 2014.

The Saudi Steel Pipes Company (SSP) contributed SR60,950,000 to the Chemical Development Company, or 20% of the total.

On December 30, 2013, the Polysilicon Technology Company Ltd. project is progressing according to plan, that the installation of some machinery has started, and that the trial run would take place in the second half of 2014.
The trial run is intended to last six months, after which commercial manufacturing will begin.

According to their release, the project is progressing on schedule and within budget in 2015, with an 83% completion rate.

The financial statements, the Chemical Development Company increased its capital by SR35 million to SR300 million, with “Saudi Pipes” contributing only SR7 million to the increase.

On December 14, 2014, it was announced that the Polysilicon Technology Company project in Jubail Industrial City had been finished, with the construction and installation of machinery completed on time and within budget, and that the six-month trial operation had commenced.

On December 15, 2014, it was reported that the Polysilicon Technology Company project in Jubail Industrial City began trial operation in phases on December 1, 2014, with commercial operation expected by the end of the first half of 2015.

It’s worth noting that the financial impact has not been known until the end of the Fiscal Year 2015.

“Saudi Steel Pipes” announced on June 29, 2015 that the trial run in the Polysilicon Technology Company project in Jubail Industrial City II, which began in stages on December 1, 2014, was a success, and that the stage of obtaining qualification from international companies, which is expected to last six months, has begun.

Commercial operations are planned to begin in the first quarter of 2016. The financial impact will be visible at the end of the Fiscal Year 2016.

The Board of Directors of ” Saudi Steel Pipes ” decided in Q4-2017 that the investment’s value was not recoverable, and the whole value of the investment was written off from the company’s financial statements for the years 2016 and 2017.