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Saudi Aramco has agreed to acquire an additional stake of approximately 22.5% in Saudi Arabia's Rabigh Refining and Petrochemical Co. (Petro Rabigh) from Sumitomo Chemical for $702 million.
Aramco and Tokyo-based Sumitomo Chemical currently each own 37.5% of shares in the Tadawul-listed refiner Petro Rabigh.
Upon completion of the transaction, which is priced at 7 Saudi riyals ($1.86) per share, Aramco will become Petro Rabigh’s largest shareholder with an equity stake of approximately 60%, while Sumitomo Chemical will retain an equity stake of 15%, the companies said.
The deal "is part of a package of financial measures intended to reinforce Petro Rabigh’s financial position", Aramco said in a Tadawul filing on Wednesday.
The proceeds received by Sumitomo Chemical from the sale will be injected into Petro Rabigh, through a mechanism to be agreed with Petro Rabigh.
Aramco will also provide additional funds to Petro Rabigh, via a mechanism also to be agreed, matching the $702 million from Sumitomo Chemical to improve Petro Rabigh’s financial position, bringing the aggregate injection amount to $1.4 billion.
In addition, Aramco and Sumitomo Chemical have agreed to a phased waiver of shareholder loans of $750 million each, which will result in a $1.5 billion direct reduction in Petro Rabigh’s liabilities.
These measures are expected to improve Petro Rabigh’s balance sheet and cash liquidity as part of a remedial plan that includes initiatives to upgrade the refinery.
Hussain A. Al Qahtani, Aramco Senior Vice President of Fuels at Aramco, said: "By increasing our shareholding, we expect to achieve even closer integration with Petro Rabigh and facilitate its turnaround strategy. We look forward to building on our existing relationship with Petro Rabigh, in alignment with our strategic goals.”
The transaction is subject to customary closing conditions including regulatory approvals and other third-party approvals.
(Writing by Brinda Darasha; editing by Seban Scaria)
