Solidarity, Aljazira Takaful merger takes effect as creditor objection period ends

Logo of Solidarity and Aljazira Takaful

The creditor objection period for the merger between Solidarity Saudi Takaful Co. (Solidarity) and Aljazira Takaful Taawuni Co. ended Feb. 26, 2021, without any outstanding objections from Solidarity’s creditors.

The company said in a statement to Tadawul that it has received two separate objections from creditors pertaining to existing claims previously filed against the company, and is currently awaiting final judgement from a court in Saudi Arabia.

Solidarity’s ultimate liability pertaining to these two claims is still subject to a final judgement from the court; however, these potential liabilities and/or debts are not currently due and are deferred debt for the purpose of the provisions of Article 193 of the Companies Law.

Accordingly, Aljazira Takaful, as the surviving entity, in line with its shareholders’ resolution approved, during the extraordinary general assembly meeting on Jan. 26, 2021, has provided a written undertaking assuming full responsibility to settle these potential future debts of Solidarity, if they are determined to have materialized and become due in the future.

The merger between the two insurers has become effective, as Solidarity has expired and all its assets and liabilities have transferred to Aljazira Takaful, which will continue to exist.

As a result of the merger deal, all the shares of Solidarity will be cancelled, and Aljazira Takaful will implement this by increasing its capital and issuing 12.07 million new ordinary shares in Aljazira Takaful, with a par value of SAR 10 per share.

These shares will be in favor of Solidarity shareholders, who are registered in the shareholders’ register at the Securities Depository Center (Edaa) at the end of the trading period on Feb. 25, 2021.

In a separate bourse statement, Aljazira Takaful said that the merger will take place by increasing its paid-up capital from SAR 350 million to SAR 470.66 million and increasing the number of shares from 35 million to 47.07 million fully paid-up shares.

This will be done after both companies fulfilled the merger terms agreed upon according to the agreement concluded and described in the shareholders ’circular and the offer document issued by Aljazira Takaful regarding the merger deal.

According to what is indicated in the schedule of important dates and main stages of the merger deal contained in the shareholders ’circular and the offer document, it is expected that the shares of Solidarity will be canceled in the trading and listing of the new shares in Tadawul and allocate

them to the benefit of its shareholders who are entitled to it within a period not exceeding the sixth trading period following the announcement.

The necessary legal procedures related to the amendment of the commercial register of Aljazira Takaful and the cancellation of the commercial registry and the investment license of Solidarity will be completed according to the schedule of important dates and the main stages of the merger deal mentioned in the shareholders ’circular and the offer document.

If the calculation of the number of shares owed to any of the shareholders of Solidarity based on the swap factor resulted in fractions of shares, the resulting number will be rounded to the lowest integer number.

Fractions of shares will be collected and sold in circulation at the market price at the time on behalf of the shareholders of Solidarity who are entitled to it.

The proceeds, resulting from the sale of fractional shares, will be distributed to all those who deserve it, within a maximum period of 30 days from the date of merger completion. The costs related to the sale of fractions of shares will be deducted from the total proceeds of the fractional sale.

According to data compiled by Argaam, Solidarity announced the start of the creditor objection period for the merger with Aljazira Takaful on Jan. 28, 2021, and ended on Feb. 26, 2021.

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