Saudi Arabia’s Rabigh Refining and Petrochemical Company (Petro Rabigh) has received an approval from the kingdom's Capital Markets Authority to increase its total share capital through a proposed rights issue transaction.
The rights issue will be offered to existing shareholders through the issuance of more than 795 million new shares at an offer price of 10 Saudi riyals ($2.7) per share, the company said in a statement on Wednesday.
It will be carried out through an increase in the company’s share capital by more than 7.9 billion riyals, increasing the share capital to over 16.7bn riyals from nearly 8.8bn riyals.
Petro Rabigh said it will hold an extraordinary general meeting to seek shareholders’ approval on the transaction.
The transaction is in line with its strategic objectives to improve the financial position through enhancing equity and reducing long-term liabilities, the company said.
“As a company, we have a clear strategy supported by promising performance pillars and a pipeline of opportunities in both regional and international markets,” Othman Al Ghamdi, president and chief executive of Petro Rabigh, said.
“The timing of this transaction is important, with the rights issue taking place against a positive backdrop of improved liquidity and, more importantly, a strong rebound for the company’s performance in the past year,” he added.
The rights issue will support operations by paying down a considerable sum of existing liabilities, enabling greater access to new sources of capital for the future, the company said.
Petro Rabigh was originally established as a basic topping refinery with crude oil processing facilities. However, in 2005, Saudi Aramco and Japan’s Sumitomo Chemical formed an equal joint venture to transform the business into an integrated refinery and petrochemicals complex.
By leveraging the network, knowledge, marketing and technology capabilities of its founding shareholders, Petro Rabigh has been able to create innovative specialised products that have a high demand in the regional and international market, Ibrahim Al Buainain, chairman of Petro Rabigh, said.
The company is well positioned to maintain its spot as the only regional player offering both petrochemical and refined products, he added.
“As a responsible business, our focus is, and will always remain, on long-term value creation. This transaction is an important lever that enables us to continue delivering on our strategic priorities and meet our commitments to our shareholders,” Mr Al Buainain said.