Tuesday 19 June 2018

5 banks to underwrite $1.6bn Zain Saudi issue

Riyadh, June 5, 2012

Saudi Arabia's Al-Rajhi Bank and Banque Saudi Fransi are among five banks underwriting a 6 billion riyals ($1.6 billion) rights issue from indebted telecoms operator Zain Saudi, according to the issue prospectus.

Lead manager Saudi Fransi Capital, the investment banking unit of Banque Saudi Fransi, and Rajhi Capital, part of Al-Rajhi Bank, will each underwrite 44.8 percent of the issue's 600 million shares.

Albilad Investment will cover 3.81 percent, while units of Alinma Bank and Saudi Hollandi Bank will each underwrite 3.33 percent.      Under Saudi stock market rules, all share offerings must be underwritten.

Zain Saudi in May received regulatory approval to cut its share capital to 4.8 billion riyals from 14 billion, with the move aimed at eliminating some of its accumulated losses which stood at 10.1 billion riyals at the end of the first quarter.

Once this is completed, the operator - an affiliate of Kuwait's Zain - will launch the rights issue, with the proceeds largely used to clear some of its debts.

Zain Saudi had liabilities of 22.9 billion riyals as of March 31. These include 4.1 billion riyals borrowed from shareholders, some of which will be converted into new shares as part of the rights issue.

The offering still requires the approval of Zain Saudi shareholders at a meeting scheduled for June 25. A date for the offering will be set once this assent is granted. Shares will likely be sold at par value, which is 10 riyals each.

The company will allocate 1.15 billion riyals of the proceeds to expand its network coverage and improve services, according to the prospectus. Zain Saudi's share of the kingdom's mobile subscribers fell four percentage points to 12 percent in 2011, according to Zain's annual report, leaving it a distant third to Saudi Telecom Co and Etihad Etisalat (Mobily).

In the prospectus, Zain Saudi warns intense competition may hurt its attempts to win back customers as well as impacting marketing costs and call tariffs. These difficulties will affect the bottom line, Zain Saudi warned. The company has yet to make a quarterly net profit nearly four years after launching services and does not expect to pay an annual dividend before 2015, the prospectus added. - Reuters

Tags: Al-Rajhi | rights issue | zain saudi | BSF |

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