Tihama Advertising and Public Relations Co. updated the use of the proceeds from its rights issue, which was between Oct. 4, 2020, and Nov. 15, 2020.
The total proceeds reached SAR 100 million, of which SAR 3.62 million was utilized for the direct and indirect expanses of the capital increase. Thus, the net proceeds amounted to SAR 96.38 million, the company said in a filing to Tadawul.
Tihama used SAR 1.86 million from the proceeds to expand its advertising network, by adding 15 new billboards.
The firm invested SAR 20 million for partnerships in the production segment. It also placed an investment deposit worth SAR 2 million in a local bank, receiving in return credit facilities worth SAR 20 million.
The Tadawul-listed company invested SAR 251,250 in developing the automated systems and applications, and used SAR 1.99 million as part of the investment costs of opening the airport branches.
The company also used SAR 1.43 million for the contract of supplying five digital billboards.
The amount remaining stands at SAR 68.85 million, following the use of 31.15% of the rights issue proceeds.
Differences in the actual use of the right issue proceeds of 5% or more from what was previously disclosed in the prospectus and the reasons and justifications for the differences:
- SAR 378,000 saved from the capital increase expenses, as the estimated cost of the expenses was SAR 4 million as stated in the prospectus.
- SAR 1.64 million was allocated for expanding the advertising network, while the actual investment reached SAR 1.86 million due to a rise in the actual rents of the ad locations compared to the estimated cost.
- SAR 2 million was invested in partnerships in the production segment compared to an estimated amount of SAR 2.59 million, according the plan of using the rights issue proceeds during Q3 2020.
- SAR 20 million worth of investment deposit was placed in a local bank and in return the company received credit facilities worth SAR 20 million to partially restructure its financial obligations as part of the company’s plan to transfer part of its short-term obligations to medium-term obligations. This will help improve the firm’s cash flows as part of the credit facilities will be used in replacing the outstanding financing, which is quarterly installments ending on Dec. 15, 2021, with two-year medium-term financing.
- SAR 251,250 was used in developing the automated systems in the retail segment to improve the procedures related to the sales reports. The company planned to start developing the automated systems and apps as of Q1 2021.
- SAR 1.99 million was used as part of the company’s investment costs of opening the airport branches compared with SAR 18 million allocated by Tihama for this purpose in Q3 2020. This difference is attributed to the delay in signing the contracts and allocating the locations due to the outbreak of COVID-19.
- SAR 2.38 million was allocated for opening new branches in the retail segment and SAR 2.75 million for opening new branches in King Khalid International Airport in Q3 2020. However, the company has not used any amount from the proceeds due to the delay in implementing such investments due to COVID-19.
When excluding the investment deposit, which was placed as a guarantee for the financing, the remaining amount of the proceeds reaches SAR 88.85 million, and the percentage of the amount used from the proceeds becomes 11.15%.
According to data compiled by Argaam, shareholders approved the board's recommendation to increase capital from SAR 75 million to SAR 175 million through a SAR 100 million rights issue.
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