Petro Rabigh recommends capital hike via private placement followed by capital cut

In a statement to Tadawul, the company said following the proposed capital increase, it will continue to have only ordinary shares. These will be split into two classes: existing shares, which will be designated as Class (A), and the newly issued shares as Class (B).

Class (B) ordinary shares will have no voting rights. They will, however, grant a defined entitlement to dividends - if distributed - at varying ratios starting from 2028, along with a priority in the event of liquidation.

No changes will apply to any rights or obligations related to the existing shares. 

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The company is exempted by the Capital Market Authority (CMA) from the provisions of Article (55) (A) of the Rules on the Offer of Securities and Continuing Obligations. Accordingly, Petro Rabigh is allowed to issue class (B) ordinary shares, while offering them in a private placement without listing.

The capital increase remains subject to the approval of the company’s extraordinary general meeting (EGM), which will be scheduled and announced at a later date.

Ahead of the EGM, the company will publish a shareholder circular, including details of the capital increase, the characteristics, and restrictions of the class (B) ordinary shares, risk factors related to the capital increase, as well as other financial and legal details.

Petro Rabigh further entered into a subscription agreement with the founding shareholders, on Aug. 30, 2025, which sets out the terms related to the steps and procedures for the capital increase, the issuance of class (B) ordinary shares, and their subscription.

The key terms of the agreement include that the founding shareholders shall subscribe to the class (B) ordinary shares at the issue price (equal to the par value of SAR 10), the company should obtain the EGM approval, as well as all necessary and required approvals or exemptions from relevant regulatory authorities and the approval of the company’s lenders. In addition, a key condition precedent is the completion of the share sale from Sumitomo to Saudi Aramco, which the oil giant announced on Aug. 7, 2025.

Moreover, each party will provide a set of standard pledges and warranties, regulation of restrictions on the disposal of class (B) ordinary shares after being issued and other standard provisions including confidentiality, general provisions, and dispute resolution.

The company shall use the capital increase proceeds, amounting to SAR 5.26 billion, to repay part of its debts. The subscription agreement will terminate if the conditions are not fulfilled within a maximum period of eight months from the date of signing (April 30, 2026), unless otherwise agreed by the parties.

The founding shareholders are related parties and major shareholders of the company.

In a separate statement on Tadawul, the company’s board of directors proposed reducing capital as a second step from SAR 21.97 billion to SAR 16.71 billion by reducing the par value of class (A) ordinary shares from SAR 10 to SAR 6.85.

The capital reduction is conditional upon the completion of the capital increase.

*Capital after increase

The capital reduction will have no material impact on the company’s financial obligations, performance, or operations. However, it will be subject to the approval of the relevant authorities and the company’s EGM.

The reduction percentage of 23.95% is calculated based on the company’s post-increase capital. However, the reduction corresponds to 31.5% of the current capital represented by Class (A) ordinary shares.

The capital increase and reduction plans align with Petro Rabigh’s strategic plan aimed at improving its operational performance and strengthening its financial position, thereby enhancing growth.

Riyad Capital was appointed as financial advisor for the capital increase and reduction, while Ziyad Samir Hassan Khashim Law Firm was named as legal advisor.

The company expects to complete the capital reduction before year-end and will announce the date of submitting the file to the CMA.