The telecom operator, a unit of Kuwait-based telecoms operator Zain Group, may convert its entire debt about into shares. It did not specify how much it owes to the ministry. The company is proposing a reduction in its share capital and a subsequent capital increase via a rights issue.
In a statement, it said that it has entered discussions with the aim to convert whole or part of the outstanding debts due to the ministry into shares in the company, through partial underwriting of the proposed rights issues or any other means. It said the planned transaction is subject to the outcome of the negotiations with the ministry. However, there was no mention of when these talks will be finalised.
Zain Saudi Arabia will also have to seek necessary approvals from governmental and regulatory bodies including the Communication and Information Technology Commission and the Capital Market Authority. Furthermore, it must present the deal to its shareholders. At its current phase, the financial impact of the proposed transaction cannot be calculated.
In June, Zain Saudi Arabia signed a 2.25 billion Saudi riyals (Dh2.2 billion) Islamic loan to refinance an existing facility with the Commercial and Industrial Bank of China. The company last month swung to a second-quarter net profit to 130 million riyals versus a loss of 38 million riyals a year ago. Net revenue for the quarter rose by 11 per cent.