Zain Saudi Arabia board approves capital restructuring program including a US$1.6 billion rights issue to fund future growth
• Strengthening the mobile operation, combined with a planned cash investment and reduced debt levels, to create a financially stronger company
• New management team appointed to promote greater co-operation between Zain Group and Zain KSA
Riyadh, 26 October 2011
In order to strengthen Mobile Telecommunications Company Saudi Arabia (“Zain KSA” or the “Company“) in the long-term interests of all stakeholders, and to deliver a better service to customers through extensive network upgrades and new product offerings, His Royal Highness Prince Dr. Hussam bin Saud bin Abdul Aziz, Chairman of the Board of Directors of Zain KSA announced that the Company’s Board of Directors has recommended at its meeting today that the Company should undergo a reduction of its capital (the “Capital Reduction“) followed by a SAR 6.0 billion (US$1.6 billion) rights issue (the “Rights Issue“, and collectively the “Capital Restructuring“), subject to the consent of the Capital Market Authority (the “CMA“), the Ministry of Industry and Commerce (“MoCI“) and the approval of other relevant parties. The Capital Reduction will result in the Company’s paid-up capital being reduced from SAR 14.0 billion (approximately US$3.73 billion) to SAR 4.801 billion (approximately US$1.28 billion). The paid-up capital will be subsequently increased to SAR 10.801 billion (approximately US$2.88 billion) by way of the Rights Issue.
The Rights Issue will consist of raising fresh equity and the capitalisation of subordinated shareholder loans to the Company. The fresh equity will, subject to obtaining the relevant approvals, be used to reduce bank debt, enhance the quality and performance of the existing network as well as to expand the Company’s recently launched 4G LTE hi-speed internet network. The fresh equity will also be used to fund the future growth of the Company, while the capitalisation of the shareholder loans will further reduce the debt levels of the Company.
The Capital Reduction and the Rights Issue will be subject to shareholder approval at respective extraordinary general assemblies of the Company, to be held after all relevant consents and approvals have been obtained.
Commenting on the Capital Restructuring, Mr Nabeel Bin Salamah, Zain Group CEO said that, “Zain KSA stands on the threshold of an exciting new dawn in the Saudi Arabian mobile telecom sector and this capital restructuring and rights issue will strengthen the financial position and ensure the long-term viability of the Company. The relationship between Zain KSA and Zain Group will be stronger and the opportunities to achieve genuine synergies will become apparent with a new management team. Zain KSA will be transformed, allowing the company to deliver the very latest network technology and exciting broadband product offerings to all our customers.”
Mr Bin Salamah further added, “We have decided to take a vigorous approach towards Zain KSA and to make it a key pillar of Zain Group’s focus. The combination of a new management team, an ambitious investment plan and new financial structure will have a positive impact on the performance of the company and create value for all its stakeholders. We have every confidence in the future prosperity of Zain KSA as the company is operating in a vibrant economy of which the mobile telecom sector is a key driver.”
Responsible for implementing the new strategy, the recently appointed Managing Director and CEO of Zain KSA, Mr Khalid Al Omar said, “I look forward to playing a key part in the future enhancement of the telecommunications sector in the Kingdom and contributing to the economic development of this great nation. Backed by this proposed new financial structure and with the sound foundations of a state-of-the-art 4G LTE hi-speed network, we will be in a position to continue offering appealing broadband services to an ever growing customer base, making Zain KSA a force to be reckoned with in the Kingdom. In close coordination with Zain Group, we will spare no effort in ensuring that customers receive the best mobile telecommunications services and that growth is achieved across the operation.”
About Zain KSA
Following a successful bid for the third mobile licence in March 2007, Zain commenced commercial operations in the Kingdom of Saudi Arabia in August 2008. Offering a wide array of advanced mobile voice and data services, and supported by a strong and appealing brand that has captured the heart and minds of the region, Zain KSA has established itself as a formidable operator covering over 90% of the Kingdom’s populated area with national roaming agreements for the remaining areas. Most recently Zain upgraded its predominantly HSPA+ network and is today offering 4G LTE hi-speed internet broadband services in major cities across the Kingdom. The company is listed on the Tadawul (stock ticker code: Zain).