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Saudi- MMG board approves recovery plan
(MENAFN- Arab News) ALKHOBAR: Saudi contractor Mohammad Al-Mojil Group's (MMG) board had approved a recovery plan that use most of its existing capital base to pay off debts and new cash raised through a share issue it said on Sunday.
The firm which got into difficulty after over-extending itself trying to take advantage of a boom in construction in the Kingdom has not traded on the Saudi bourse since July 2012 when its shares were suspended by the regulator after breaching rules relating to accumulated losses.
MMG said in September its accumulated losses for the period ending Aug. 31 stood at SR2.689 billion equivalent to 215 percent of its paid-up capital. Saudi shares are suspended once losses pass 75 percent of capital.
Under the plan approved at a board meeting on Thursday MMG's capital will be cut from SR1.25 billion to SR125 million creating one share for every 10 shares currently possessed it said in a bourse filing.
Such an accountancy technique will allow the company to effectively write off some of its accumulated losses.
At a later stage it said its board will recommend increasing the capital again via a rights issue and/or through preferred shares to help it restructure its operations.
Also part of the plan would be a 'significant reduction' in the amount payable to the lenders in respect of outstanding sharia-compliant loan facilities it said.
All these steps would be subject to the outcome of negotiations with potential new investors existing lenders and regulatory approval the statement said.
Should the restructuring go ahead it is hoped that all legacy projects would be completed in the first quarter of 2015 allowing the business to return to profitability in subsequent quarters as it takes on new business opportunities MMG added.
The firm which got into difficulty after over-extending itself trying to take advantage of a boom in construction in the Kingdom has not traded on the Saudi bourse since July 2012 when its shares were suspended by the regulator after breaching rules relating to accumulated losses.
MMG said in September its accumulated losses for the period ending Aug. 31 stood at SR2.689 billion equivalent to 215 percent of its paid-up capital. Saudi shares are suspended once losses pass 75 percent of capital.
Under the plan approved at a board meeting on Thursday MMG's capital will be cut from SR1.25 billion to SR125 million creating one share for every 10 shares currently possessed it said in a bourse filing.
Such an accountancy technique will allow the company to effectively write off some of its accumulated losses.
At a later stage it said its board will recommend increasing the capital again via a rights issue and/or through preferred shares to help it restructure its operations.
Also part of the plan would be a 'significant reduction' in the amount payable to the lenders in respect of outstanding sharia-compliant loan facilities it said.
All these steps would be subject to the outcome of negotiations with potential new investors existing lenders and regulatory approval the statement said.
Should the restructuring go ahead it is hoped that all legacy projects would be completed in the first quarter of 2015 allowing the business to return to profitability in subsequent quarters as it takes on new business opportunities MMG added.
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