Following a surge in accumulated losses, the board of directors has opted to reduce the company’s capital by 69.71% to 45.43 million SAR, aimed at offsetting 104.57 million SAR in losses as of June 30, 2026.
The Bottom Line
- Capital Reset: The company is slashing its capital from 150 million SAR to 45.43 million SAR, canceling 10.46 million shares to clear a 104.57 million SAR deficit.
- Rights Issue Strategy: Despite the significant reduction, the company maintains its plan for a 90 million SAR rights issue to bolster its balance sheet and fund strategic operations.
- Regulatory Hurdles: Both the capital reduction and the subsequent rights issue remain subject to approval from the Capital Market Authority (CMA) and the Extraordinary General Assembly.
Analyzing the Shift in Capital Structure
The decision to escalate the capital reduction, initially proposed at a lower percentage in July 2026, reflects the deteriorating financial reality captured in the Q2 2026 preliminary results. By the close of the first half of the year, accumulated losses reached 104.57 million SAR, representing 69.71% of the company’s total capital. This necessitates a more aggressive restructuring than the 56.86% reduction previously discussed.
Here is the math: The company will cancel approximately 0.697 shares for every one share held by investors. This move is strictly a balance sheet maneuver. According to the company’s filing on the Saudi Exchange (Tadawul), this reduction will have no material impact on the firm’s operational commitments, day-to-day business, or regulatory standing.
| Metric | Value |
|---|---|
| Current Capital | 150 million SAR |
| Capital Post-Reduction | 45.43 million SAR |
| Accumulated Losses Offset | 104.57 million SAR |
| Reduction Percentage | 69.71% |
| Number of Shares Post-Reduction | 4.54 million shares |
Strategic Implications and Market Context
The firm has appointed Wasatah Capital as both the financial advisor for the capital reduction and the lead underwriter for the rights issue.
The Path to Regulatory Approval
The timeline for these changes is contingent on formal approvals. The reduction will take effect at the close of the second trading day following the Extraordinary General Assembly meeting. Similarly, shareholders who appear on the register at the end of that same period will be eligible for the rights issue subscription.
The company has promised to disclose any material developments as they occur. For now, the focus remains on the mechanics of the reduction and the eventual subscription process, which will define the company’s capitalization for the remainder of the 2026 fiscal year.
