Red Sea International board proposes capital hike via debt conversion

Logo of Red Sea International Co.

Red Sea International Co.'s board of directors recommended increasing capital through converting SAR 80.23 million worth of debt owed to Al-Dabbagh Group, as well as capitalizing SAR 294 million debt that will result from acquiring Fundamental Installation for Electric Work Co. Ltd. (First Fix), according to a statement to Tadawul.

Therefore, the total amount of the debt conversion will be SAR 374.23 million, ("the capital increase"), it added.

The debt conversion aims to improve the company’s liquidity and credit position and strengthen its ability to achieve its growth objectives.

Moreover, the capital increase will not result in any financial liability or require any cash contribution by the company’s other shareholders, the statement added.

All required regulatory approvals and the approval of the company’s extraordinary general assembly should be acquired prior to increasing capital through debt conversion, Red Sea International stated.

The company also noted that an announcement will be made upon the appointment of a financial advisor to manage its application to increase capital by way of debt conversion, adding that it will also make an announcement when such application is submitted to the Capital Market Authority for approval in a timely manner.

The company announced last May that accumulated losses amounted to SAR 191 million by the end of Q1 2023, representing 63.2% of capital, according to Argaam's data.