Zain Saudi Arabia approves $1.6 billion rights issue following failed sale of 25 per cent stake in company.
Zain Saudi Arabia seeks to raise $1.6 billion
The board of Zain Saudi Arabia has approved a $1.6 billion (Dh 5.87bn) rights issue and a plan to reduce its debt.
A new management team has been appointed at the telecommunications firm, in a bid to "promote greater co-operation" with Kuwait's Zain Group, which tried and failed to sell its 25 per cent stake in the Saudi Arabian operation.
Following the collapse of the deal, Zain Saudi Arabia says it approved the capital restructuring program to "fund future growth".
Zain Saudi Arabia says it plans to reduce its paid-up capital to 4.801 billion Saudi riyals from 14.0 billion Saudi riyals.
Paid-up capital will then be increased to 10.801 billion riyals through a $1.6 billion rights issue, it says.
"The rights issue will consist of raising fresh equity and the capitalisation of subordinated shareholder loans to the company," the firm said.
"The fresh equity will, subject to obtaining the relevant approvals, be used to reduce bank debt, enhance the quality and performance of the existing network as well as to expand the company's recently launched 4G LTE hi-speed internet network."
The move comes at a time of uncertainty for Kuwait's Zain Group.
The group's proposed $950 million sale of its stake in the Saudi operation was abandoned last month.
Kingdom Holding, an investment company run by the Saudi billionaire Prince Al Waleed bin Talal, and the Bahraini telecoms firm Batelco were lined up to buy the stake.
The top management of Zain Group are currently appealing against a ruling by a lower court in Kuwait to annul the board and revoke its decisions.