Chemanol board recommends 77.8% capital cut

Logo of Methanol Chemicals Co. (Chemanol)

Methanol Chemicals Co.'s (Chemanol) board of directors recommended, on Oct. 8, a 77.8% capital cut to SAR 150 million from SAR 674.5 million, to restructure capital and offset accumulated losses.  

Chemanol said in a Tadawul statement that the capital reduction will not affect its obligations, operations, or financial/regulatory performance. Shareholders’ ownership will also remain unchanged.

Chemanol appointed MEFIC Capital on Oct. 2 as its financial advisor for the capital reduction, noting that it will announce the submission of the capital cut request to the Capital Market Authority (CMA) and provide updates in line with the CMA regulations.

The reduction remains subject to approval from the relevant authorities and the EGM.

Chemanol will use SAR 11.04 million from its statutory reserve, equal to 12.4% of the total, to cover the remaining 1.6% of accumulated losses, in addition to canceling shares after obtaining all required approvals.

The company said the move is a key step to strengthen its financial position, improve performance, and support future growth while maximizing shareholders' equity.

Chemanol attributed its accumulated losses mainly to an SAR 374 million asset impairment related to ADDAR Chemicals Co. (ACC) and Global Co. for Chemical Industries (GCI), and an additional SAR 127 million from writing off goodwill. ACC and GCI were acquired during the previous board term.

The results were also affected by provisions and operating losses due to market conditions.