Zain Saudi Arabia raises a $ 1.6 billion loan to finance...

Mobile Telecommunications Company Saudi Arabia (Zain Saudi Arabia) said in a disclosure to the stock exchange that it had raised 6 billion riyals ($ 1.60 billion) to refinance an existing debt and secure access to additional liquidity to finance the company’s business growth plans.

The Islamic loan, with the structure of murabahah, will refinance an existing debt facility until 2025, with an outstanding value of 3.85 billion riyals.

The company, which is 37% owned by Kuwaiti Zain Group, said that the new debt package comes with a grace period of two years and better commercial terms.

Zain Saudi Arabia said that this preferential long-term extension comes after fruitful discussions with Islamic and conventional banking institutions at the local, regional and international levels.

This refinancing shows the confidence of Saudi and international banks in the financial strength of the company. The rescheduled murabaha financing is important in reducing the cost of debt, improving financial performance, and the profitability of the company.

The company said that on September 30, “the company will only draw the value of the outstanding amount from the murabaha financing (3.85 billion Saudi riyals) and the rest of the amount will be withdrawn in installments in line with the company’s plans.”

Murabaha financing is a cost-plus-profit arrangement in line with Islamic finance standards.

Zain Saudi Arabia said, “The rescheduling of murabaha financing is important in reducing the cost of debt, improving financial performance, and the profitability of the company.”

According to the statement, refinancing was provided by a group of banks consisting of Al-Rajhi Bank, Arab National Bank, Banque Saudi Fransi, National Bank of Kuwait, Samba Financial Group, Al-Jazira Bank, Gulf International Bank and Credit Agricole Bank.

This preferential long-term extension comes after fruitful discussions with Islamic and traditional banking institutions at the local, regional and international levels.

This refinancing shows the confidence of Saudi and international banks in the financial strength of Zain Saudi Arabia, its suitability and its ability to fulfill its financial obligations.

The rescheduling of murabaha financing is important in reducing the cost of debt, improving the financial performance and profitability of the company.

Capital structuring

It is noteworthy that Zain Saudi Arabia announced on 27 August the decision of the company’s board of directors to increase the capital, due to the continuous improvement in the company’s operations and its ability to reduce its accumulated losses from approximately 28% to 24.7%.

The company revealed its plan to increase the capital by reducing the company’s capital from 5,837,291,750 Saudi riyals to 4,487,291,750 Saudi riyals, which represents a decrease in the capital by approximately 23%, by canceling 135 million shares (“capital reduction”). As a result, the number of issued shares will be reduced from 583,729,175 shares to 448,729,175 shares.

The company confirmed that the ownership percentage of any shareholder in the company will not change as a result of the capital reduction, and that the capital reduction will not affect the existing company’s obligations or its operations.