Saudi Industrial Services Co. (SISCO) concluded, on July 14, the sale of its 21.2% direct equity stake and 18.8% equity stake of other minority shareholders in its subsidiary, Red Sea Gateway Terminal Limited (RSGT), to the Public Investment Fund (PIF) and COSCO SHIPPING Ports Limited (CSPL), through its wholly-owned subsidiary, Sound Joyce Enterprises Limited, on a pro-rata basis for SAR 556.5 million
The transaction involves the sale of SISCO’s 21.2% direct equity stake in RSGT; sale of 4% direct equity stake in subsidiary, Saudi Trade and Export Development Co. Ltd. (LogiPoint), of which SISCO owns 76%; and 14.8% equity stake of other minority shareholders of RSGT to both PIF and CSPL on a pro-rata basis, the company said in a bourse statement.
The deal value was determined based on the market value of RSGT which stands at SAR 3.3 billion.
LogiPoint will receive total gross proceeds of SAR 105 million (before all transaction costs) for the divestment of its 4% equity stake in RSGT, the statement added.
The transaction will benefit and enhance RSGT’s value proposition, a key asset within SISCO’s portfolio of subsidiaries, by bringing on board world-class strategic investors (PIF and CSPL) who will help drive the future growth of the business.
The deal is in line with SISCO’s long-standing strategy of strengthening and optimizing its portfolio with the ultimate objective of providing long-term value to shareholders. It also demonstrates SISCO’s track record for developing its assets, and its ability to create value for shareholders, the Saudi-listed firm added.
The financial impact from the deal, which will be calculated after finalizing Q2 2021 financial results and the final payment of costs associated with the transaction, will be reflected on SISCO’s Q3 2021 financial statements.
In addition, the impact of LogiPoint’s divestment of 4% direct equity stake in RSGT will also be reflected on SISCO’s Q3 2021 financial statements subject to the same conditions.
PIF and CSPL now own a 20% equity stake in RSGT, each, with the remaining 60% shares are being held by SISCO subsidiary, Red Sea Ports Development Co. Limited (RSPD), in which it owns 53% stake.
SISCO’s stake in RSGT was reduced from 60.6% to 36.36%. From an accounting perspective, SISCO will continue to consolidate RSGT through RSPD, the company said, indicating that the impact of the reduction in effective shareholding will also be reflected on Q3 2021 financial statements.
A further announcement quantifying the impact of the above adjustments will be made following the release of Q2 2021 financial statements. A full disclosure of the impact on the Q3 2021 financial statements will also be included in the notes to the Q2 2021 financial statements.
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