City Cement shareholders to vote on 26% capital reduction on Aug. 25

Shareholders of City Cement Co. will vote on a 26% capital cut to o SAR 1.4 billion from SAR 1.89 billion in the extraordinary general meeting (EGM) scheduled for Aug. 25, the company said in a statement to Tadawul.

The capital will be decreased as the company has excess capital.

The capital reduction will be financed from the company’s internal resources. However, the cement producer signed Islamic loan agreements with Saudi British Bank (SABB) and Riyad Bank at a total value of SAR 50 million each. The company will use these loans in reducing its capital only.

City Cement explained that these facilities would be only used, if the company was unable to fully finance the capital decrease from its own resources. The facilities are non-binding and will carry no commission or administrative fees, in case they are not used.

Moreover, City Cement’s shareholders will vote on amending Articles (7 and 8) of the articles of incorporation, related to capital and subscription. They will also discuss adding a new article on stock repurchase.

The company added that the capital cut will not have any material impact on its obligations, operations, operating or financial performance, expecting the move to reflect positively on profitability and key performance indicators.

According to data compiled by Argaam, the Capital Market Authority (CMA) approved the company’s request to cut capital to SAR 1.4 billion from SAR 1.89 billion through reducing shares to 140 million from 189.2 million.