Chemanol: Investigations on ACC, GCI acquisitions reveal violations

Logo of Methanol Chemicals Co. (Chemanol)

Methanol Chemicals Co. (Chemanol) stated that the investigation into the acquisitions of ADDAR Chemicals Co. (ACC) and Global Co. for Chemical Industries (GCI) revealed violations related to conflicts of interest involving certain members of the former board and its subcommittees, as well as some of the previous owners of the acquired companies.

The company said the appointed office carried out legal investigation procedures by reviewing all acquisition documents to determine the implications of the two deals. The report was completed on Dec. 7 and included several findings and facts of certain material violations.

In a statement to Tadawul, the company said the report highlighted several material issues, including the failure of some former board members to exercise due deligence in their duties during the acquisitions, and the disregard of many findings from due diligence reports that identified risks related to the performance and financial sustainability of the acquired companies, which were heavily in debt.

The report also included a valuation of the companies acquired by a specialized firm, the outcome of which was fundamentally different from the valuation carried out during the acquisitions under the tenure of the former board. That earlier valuation was performed by a non-accredited valuer not recognized by the Saudi Authority for Accredited Valuers (Taqeem).

Based on the findings of the recently completed report, Chemanol will share the results with the relevant authorities to enable them to take the necessary actions. In addition, a specialized law firm has been appointed to initiate the statutory procedures required in light of the violations identified in the report, to safeguard the rights and interests of the company’s shareholders, the statement added.

The company indicated that any updates or developments will be announced in due course.