Aramco is getting another slice of Petro Rabigh + extending a fresh loan

Saudi Aramco is acquiring an additional 22.5% stake in Rabigh Refining and Petrochemical Company (Petro Rabigh), after signing a binding sale and purchase agreement. the two companies said in two separate disclosures to Tadawul (here and here). Petro Rabigh is a joint venture between Aramco and Japan’s Sumitomo Chemical.

The details: Sumitomo Chemical will sell down its position in Petro Rabigh to hand Aramco the stake for SAR 7.0 apiece, bringing the total value of the sale to SAR 2.6 bn (USD 702 mn). The transaction will bring Aramco’s stake in Petro Rabigh to c.60%, while Sumitomo will continue to hold a 15% stake. The remaining 25% stake will remain listed on Tadawul as freefloat shares.

Aramco + Sumitomo to waive loans, extend fresh funding: Under the agreement, Aramco and Sumitomo will also provide Petro Rabigh with an additional SAR 5.3 bn (c.USD 1.4 bn) in funding, in addition to waiving SAR 5.6 bn (USD 1.5 bn) worth of existing revolving loans the two companies had previously extended to Petro Rabigh, according to the disclosures.

The moves are meant to help turn around Petro Rabigh’s finances, after the company extended its losses to SAR 1.4 bn in 1Q 2024. The first-quarter performance brought its cumulative losses to SAR 8.9 bn, equivalent to more than 53% of its capital. Saudi regulations stipulate that a listed company whose losses exceed 50% of its capital must take action to address its financial position or dissolve the company entirely.

The story also got ink from Bloomberg and Reuters.

IN OTHER M&A NEWS-

Gulf Ins. Group (GIG) has sold its 28.5% stake in Buruj Cooperative Ins. to Cigalah for SAR 121.8 mn, with the transaction going through after receiving regulatory approval, Buruj said in a disclosure to Tadawul. The transfer means Cigalah has now replaced GIG as one of Buruj’s largest shareholders, the disclosure said.