Thimar overcame bankruptcy risks, regained track after share trading resumed: CEO

Thimar Development Holding Co. witnessed challenging circumstances in 2021 that could have led to bankruptcy, CEO and Managing Director Melfi Al-Marzouqi told Argaam.

A trading halt was placed on the stock, as accumulated losses exceeded 230% of capital and debt amounted to more than five times its assets. Additionally, the external auditor refused to issue an opinion or publish financial statements for several years.

At that time, the company had no active operations or sufficient liquidity, which prompted him and the current board Chairman, Walid Al-Shuwaier, to provide financial support to ensure continuity, Al-Marzouqi said.

“Amid all these risks, we faced another issue: the entire finance team resigned within a single month, and we were without a CEO at the time. Nevertheless, we managed to attract some new talent despite all the challenges,” he stated.

The support of the former and current boards of directors, as well as the executive management, resulted in the company’s stock resuming trading after years of suspension. In addition, creditor obligations were rescheduled, capital was increased, and losses were cut – all within just two years.

With the upcoming capital increase, Thimar expects to reduce its accumulated losses to less than 40% of capital, while debt will decline to less than 10% of total assets.

Thimar is currently studying promising investment opportunities, as the board is keen to avoid high-risk ventures, having selected only three investments out of 30 opportunities reviewed during the past period, the CEO revealed.

The company plans to utilize the SAR 195 million capital increase recently approved by the Capital Market Authority (CMA). Part of the funds will be used to complete the financial restructuring plan and settle the dues of creditors. The remaining amount will be directed towards highly profitable investments, with the aim of listing some of these future ventures on the stock market to maximize shareholder returns.

The impact of these investments will start materializing from next year, the CEO said.

Thimar’s entry into the luxury hospitality sector aligned with the Kingdom’s development and tourism boom. It acquired a 22% stake in Yamama Plus Serviced Apartments for SAR 7.6 million, with an exit option after three years at a return not less than 22% annually.

Yamama Plus plans to exceed 3,000 rooms within five years, with projected annual revenue of up to SAR 300 million, alongside a potential stock market listing, which will support Thimar’s strategy of diversifying its investments, Al-Marzouqi said.

Thimar settled all obligations owed to the General Organization for Social Insurance (GOSI) and benefited from the tax exemption initiative, saving more than SAR 1.2 million in fines and penalties.

Speaking on the claims of the Zakat, Tax and Customs Authority (GAZT), Al-Marzouqi said Thimar underwent Zakat audits for 2019–2022. An initial assessment indicated an additional SAR 4.7 million liability, but after providing clarifications, and exploring alternative solutions, especially given the loss of many records, an unqualified report was issued in the company’s favor, sparing the company from an estimated loss of SAR 4.7 million.

Regarding the liability lawsuit filed against former board members claiming SAR 230 million in compensation, the CEO said that the company has appealed and fulfilled the requirements of the adjudication committee on shareholder authorization and awaits a final ruling.

Al-Marzouqi stressed that the main challenges Thimar now faces following its restructuring are maintaining liquidity continuity and supporting the balanced growth of new investments.