Al Kathiri publishes shareholder circular for 91.5% capital cut

The company noted that the Capital Market Authority (CMA) approved its capital reduction request on Oct. 21, 2026.

The capital reduction is subject to the approval of the extraordinary general meeting (EGM); however, if the EGM does not approve the proposed reduction, the process will not proceed.

If the EGM approves the reduction, the Saudi Exchange (Tadawul) will suspend trading in the company’s shares for two consecutive trading sessions, starting on the day following the EGM approval. Trading will then resume at the adjusted price.

The company added that the capital reduction will take effect by adjusting the number of shares held by shareholders who own shares on the EGM date and whose of record in the company’s register at the Securities Depository Center (Edaa) at the end of trading on the second day following the EGM.

Al Kathiri also said that, if the EGM approves the capital reduction, the company will approach the Ministry of Commerce to obtain approval to amend its commercial registration and articles of association. Estidama Financial Business Co. (Estidama Capital) is the financial adviser for the transaction.

Following completion of the capital reduction procedures, the company plans to increase its capital by SAR 150 million through a rights issue. The proceeds are intended to strengthen its financial position, provide the funding required to implement its operational and strategic plans, and repay its sukuk, which is listed on the Saudi Exchange.

In the circular, Al Kathiri said the management believes that reducing capital to write off accumulated losses, followed by a capital increase to support liquidity and the company’s financial position—subject to the necessary approvals—alongside operational measures to increase revenue, improve margins and reduce costs, would help the company limit losses and improve its financial and operational performance.

However, the company cautioned that there is no guarantee these measures will achieve the targeted results within the expected timeframes. The plan’s success depends on several factors, including obtaining regulatory approvals, completing the proposed capital increase, market conditions and demand in the contracting and building materials sectors, and the company’s ability to implement its operational and investment plans according to approved schedules and budgets.

According to the circular, the company received a commitment and undertaking on August 26, 2026, from Meshal Mohammed Nasser Al-Kathiri, a major shareholder, Managing Director, and CEO, to provide financial support and funding of up to SAR 15 million. The support is intended to strengthen the company’s liquidity and working capital, enabling it to meet its financial obligations as they fall due.

The undertaking remains valid for 12 months from its issuance date. The necessary procedures to finalize a detailed financing agreement must be completed within 90 days of the undertaking, with the financing subject to applicable regulatory requirements and necessary approvals.

As of the date of the circular, these procedures had not been completed, and no funds had been disbursed.

The support will be structured in accordance with Islamic Shariah principles. The specific financing terms, including any returns or profit margins, repayment mechanisms, and collateral, will be set out in a detailed financing agreement.

Shareholders' Circular