Red Sea shareholders OK 59.64% capital hike via debt conversion

Logo of Red Sea International Company

Red Sea International Co.’s shareholders approved on Nov. 12 a 59.64% capital increase through the conversion of debts owed to several parties, by issuing 18.03 million new shares in their favor.

According to a statement to Tadawul, the approval includes converting debts owed to the selling partners of Fundamental Installation for Electric Work Co. (First Fix)—MSB Holding, Fares AlSaadi, and Zeyad AlSayegh—amounting to SAR 353.48 million, through the issuance of 13.39 million ordinary shares in their favor.

The approval also included increasing its share capital through the conversion of debts owed to the assignees, totaling SAR 41.31 million. The assignees, Mohammed Binladin and Ghaleb Al-Sharif, became direct creditors of the company under the assignment agreements. The conversion will be carried out through the issuance of 1.57 million ordinary shares in their favor.

Red Sea pointed out that the approval also included increasing the company’s share capital through the conversion of debts owed to Al-Dabbagh Group Holding Co. under loan and debt conversion agreements, totaling SAR 81.23 million, through the issuance of 3.08 million ordinary shares in favor of Al-Dabbagh Group. The nominal value of the newly issued shares amounts to SAR 30.77 million.

The company noted that the conversion ratio is SAR 26.4 per share, representing an issuance premium of SAR 16.4 above the nominal value.

Shareholders also approved the business and contracts concluded between the company and Al-Dabbagh Holding Group, being one of the company’s major shareholders. These contracts include the financing provided by Al-Dabbagh Group to the company, in which Chairman Amr Al-Dabbagh, and board members Mohamed Jazeel and Shahad Najim, are related parties.

The transaction value during the year ended Dec. 31, 2023, amounted to SAR 36 million. The company clarified that these amounts did not include any financial interest for Al-Dabbagh Group or any financing cost borne by the company, as stated in the board of directors’ report for the year ended Dec. 31, 2023.