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Saudi Arabian Mining Company (Ma'aden), the Gulf's largest miner, said on Tuesday that one of its units has signed new financing agreements, triggering a surge in the company’s shares.
Sahara & Ma’aden Petrochemicals Company (SAMAPCO), a subsidiary of Ma’aden, has signed agreements to refinance its existing debt, Ma’aden announced to the Saudi exchange on Tuesday.
The financing agreement is a Murabaha facility for 12 years to be repaid in 24 semi-annual instalments starting on 31 December 2019, according to the announcement. It has a value of 2.25 billion Saudi riyals ($600 million) and has been provided by a group of lenders including Saudi British Bank, National Commercial Bank, Riyad Bank, AlBilad and Banque Saudi Fransi.
According to the announcement, the new facility will replace existing debt on more favourable terms.
“As SAIBOR (the Saudi Arabian Interbank Offer Rate) declines, many companies are refinancing their higher cost loans to take advantage of the lower rates,” Pritish Devassy, head of equity research at Al Rajhi Capital, told Zawya by email on Tuesday.
Ma’aden posted a first quarter (Q1) 2019 net loss after zakat and tax of 252.9 million riyals, compared to a net profit of 753.8 million riyals in Q1 2018.
Al Rajhi Capital said in a note published on June 13 that Ma’aden announced “a weak set of Q1 2019 results with both top-line and bottom-line missing our estimates.”
The company’s shares were trading 1.65 percent higher by 13:39 GST on Tuesday at 49.30 Saudi riyals.
Arqaam Capital reiterated its sell rating on Ma'aden in a note published on June 12 at a 2 percent lower target price of 43 riyals per share.
Arqaam is forecasting a loss of 14 million Saudi riyals for Ma’aden in 2019 as a result of expected losses at its aluminium segment, at the phosphate segment and higher depreciation and interest costs. Last year, Ma’aden recorded a net profit of 1.85 billion riyals.
(Reporting by Gerard Aoun; Editing by Michael Fahy)
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