Rabigh Refining and Petrochemical Company is pushing ahead with a two-step restructuring, that will see it first raise fresh money from founding shareholders Aramco and Sumitomo, before trimming its capital to wipe out accumulated losses, according to two separate disclosures to Tadawul.

The details: The board recommended increasing capital from SAR 16.71 bn to SAR 21.97 bn by issuing 526.4 mn new Class B ordinary shares at SAR 10 each, a 31.5% increase. Once the increase is complete, the company will reduce its capital from SAR 21.97 bn to SAR 16.71 bn by lowering the nominal value of Class A shares from SAR 10 to SAR 6.85. The cut represents a 23.95% reduction from the enlarged capital or 31.5% when measured against current Class A equity.

Why it matters: The cut won’t affect operations or liabilities, but will write off SAR 5.26 bn in accumulated losses. This accounting move clears Petro Rabigh’s balance sheet of past losses, giving it more flexibility to eventually return dividends and pursue growth initiatives.

IN CONTEXT- The company’s net losses narrowed to SAR 2.06 bn in the first half of the year, compared to SAR 2.47 bn in 1H 2024, while revenues dropped 13.6% y-o-y to SAR 15.5 bn. The company’s accumulated losses hit SAR 7.34 bn by the end of 1H, equivalent to 43.9% of its share capital.

To-do list: A subscription agreement signed on 30 August between Petro Rabigh, Aramco, and Sumitomo outlines the conditions, which include shareholder approval at an EGM, regulatory clearances, lender consent, and completion of Aramco’s previously announced acquisition of Sumitomo’s stake.

What’s next: The decrease will take effect at the end of the second trading day after shareholder approval at a general meeting, which the company expects to complete before year-end.

ADVISORS- Riyad Capital is advising on the transaction, while Zeyad Sameer Khoshaim Company (K&A) is the legal advisor.

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