Red Sea BOD recommends reducing capital to SR302.3 mln, then increasing to SR452.3 mln by rights issue

Red Sea International CompanyBoard has resolved to amend the recommendation to the Extraordinary General Assembly to reduce the capital then increase the capital through rights issue, by incorporating the total accumulated losses as of 31-03-2022.

Accordingly, the Board has recommended reducing the capital as follows:

Capital before decrease: SR600,000,000

Capital after decrease: SR302,344,000

Percentage of Capital decrease: 49.61%

Number of Shares before Decrease: 60,000,000 shares

Number of Shares after Decrease: 30,234,400 shares

Reasons for the Capital Decrease: absorb accumulated losses, restructure the company’s capital, and support its future plans;

Method of Capital Decrease: through cancellation of 29,765,600 shares, or 1 share for every 2.016 shares, with a total value of SR 297,656,00.

Impact of the Capital Decrease on the Company’s Obligations, Operations or Operational, Financial or Organizational Performance of the Company: Nil

Date of reduction: The End of the Second Trading Day after the Extra Ordinary General Assembly Meeting in which the decrease was Resolved.

Approvals: Approvals of the relevant authorities and the Extraordinary General Assembly.

Appointment of a Financial Advisor and the Submission of the Application for Capital Decrease to CMA: Al-Rajhi Capital is the financial advisor for the capital decrease and increase. Also, an announcement will be made once the capital decrease application file is submitted to the Capital Market Authority for approval, in addition to any future developments in this regard.

During the same Board meeting held on 19-05-2022, the Board of Directors also recommended to the Extraordinary General Assembly – post the capital decrease – to increase the capital by SR 150 million through rights issue, to become SR 452,344,000 after the capital increase. Below are the details of the increase:

Capital before increase: SR 302,344,000

Capital after increase: SR 452,344,000

Percentage of Capital increase: 49.61%

Number of Shares before increase: 30,234,400 Shares

Number of Shares after increase: 45,234,400 Shares

Reasons for the Capital increase: to support the working capital, strengthen the company’s financial adequacy, establish a new manufacturing facility in the Central Region, develop the company’s capabilities in field of facility management and expand other activities.

Method of Capital increase: Addition of 15 million shares

Approvals: The recommendation to increase the company’s capital is subject to the approval of the relevant authorities and the approval of the Extraordinary General Assembly.

Record Date: will be for shareholders holding shares on the date of the Extraordinary General Assembly meeting in which capital increase through the issuance of rights issue is resolved, and whose names are recorded in the register of the Issuer’s Shareholders at the Depository Centre at the end of the second trading day following the date of the General Assembly Meeting.

Al-Rajhi Capital has been appointed as the consultant for the rights issue process. Also, an announcement will be made once the capital increase application file is submitted to the Capital Market Authority for approval, in addition to any material developments in this regard.