Julphar plans Dh500m rights issue to improve capital base

Drug manufacturer will offer 500 million new shares with a nominal value of Dh1 to existing shareholders

Julphar, one of the biggest pharmaceutical companies in the Middle East and Africa, is embarking on an ambitious turnaround strategy. Jeff Topping / The National

Gulf Pharmaceutical Industries (Julphar), one of the biggest pharmaceutical companies in the Middle East and Africa, is raising Dh500 million in a rights issue as it seeks to improve its capital base and debt profile.

The Ras Al Khaimah company, which is listed on Abu Dhabi Securities Exchange, will offer 500 million new shares with a nominal value of Dh1 as part of its capital restructuring.

This includes a capital reduction of Dh503m as an initial step, the company said on Monday.

“The rights issue is a key component of the transformation plan, which I am confident will further help us fuel our growth agenda in the years to come,” said Sheikh Saqer Al Qasimi, chairman of the Julphar board.

The rights issue is an offer to Julphar shareholders allowing them to subscribe for new shares at a reduced issue price of Dh1 per share. Each right allows its holder to subscribe for one new share, with each stock holding the same rights as existing shares, including the right to receive all future dividends.

The subscription period for the shares starts on June 29 and ends on July 12, the company said.

“The Dh500m rights issue is central to our turnaround strategy, which capitalises on Julphar’s core competencies to strengthen our balance sheet and invest in sustainable growth opportunities while creating sustainable shareholder value,” Essam Farouk, chief executive of Julphar said.

Julphar narrowed its losses for the first quarter by 30 per cent after cutting costs, the company said last month.

Net loss attributable to equity holders of the parent company for the three months ending March 31 fell to Dh62.5m, from Dh89.1m a year earlier.

The company's cost of sales for the period was down 15 per cent year on year to Dh90.6m while selling and distribution expenses were cut by 24 per cent to Dh49m.

Revenue fell by 6 per cent to Dh104.4m during the first three months of the year.

The newly injected capital is expected to help expand Julphar’s operations in crucial markets such as Saudi Arabia, Iraq and Egypt.

The company relaunched over 80 products in Saudi Arabia and Oman earlier this year after its compliance with manufacturing practices was approved following an inspection by the Gulf Health Council and Saudi Food and Drug Authority.

“We are working on several strategic initiatives to move us towards a cash-positive position and bring Julphar back to profitability,” said Mr Farouk.

Set up in 1980, Julphar distributes pharmaceutical products to more than 50 countries on five continents.

It has 16 manufacturing facilities in Africa, the Middle East and Asia.