King Abdullah Economic City, Kingdom of Saudi Arabia: Emaar the Economic City (“EEC” or the “Company”), the master developer of King Abdullah Economic City (“KAEC” or the “City”), announces its shareholders’ approval, during the Extraordinary General Assembly Meeting (“EGA”) convened on 31 December 2024, of a capital decrease of SAR 6,100,734,250, a key component of the Capital Optimisation Plan (“COP”) the Company announced on 8 September 2024.

The approved capital decrease will result in EEC’s share capital of SAR 11,333,333,340 being reduced by 53.83% to extinguish SAR 6,100,734,250 of accumulated losses balance as of 30 September 2024, with the accumulated losses balance being reduced to SAR 7. The capital decrease will be executed by cancelling 0.5383 share for every one share owned, with the share capital after the decrease amounting to SAR 5,232,599,090. This will stabilise the Company’s financial position without having any impact on its operational and financial performance and will lay the foundation for a stronger financial position.  The trading of the shares will be suspended for two trading days to affect the decrease, and the Company’s shares will trade with the adjusted price on the third trading day.

Mr. Abdulaziz Ibrahim Alnowaiser, CEO of EEC, commented: “The capital decrease is a critical enabler of our Capital Optimisation Plan, bolstering EEC’s financial position by extinguishing accumulated losses without disrupting business operations. With the implementation of the capital decrease, in addition to the Plan’s other main pillars, we are positioning EEC to deliver on its long-term strategy, to create and maximise value for our shareholders, and to restore the confidence of our wider stakeholder universe.”

With respect to the execution of its strategy for growth, EEC has made important strides forward in recent months. Key wins have included the conclusion of a 20-year land lease agreement with Hyundai Motor Manufacturing Middle East, valued at SAR 176 million; a SAR 88.68 million 20-year land lease agreement with MENA Tyre Company; and five-year office and unit lease agreements with the National Automotive and Vehicles Academy totalling SAR 22 million. These agreements are important drivers for growth in the KAEC Industrial Valley tenant base, and specifically in the automotive sector, a key industry for the City.

Capital Optimisation Plan to play vital role in business turnaround 

On 8 September 2024, the Company announced a transformative SAR 8.7 billion Capital Optimisation Plan (“COP”), including the restructuring of SAR 3.8 billion in bank debt, the conversion to share capital of SAR 4.0 billion in debt owed to PIF, and a new SAR 1.0 billion convertible shareholder loan from PIF to fund growth projects. The plan also includes the abovementioned capital decrease, to extinguish EEC’s accumulated losses. The COP aims to stabilize EEC's financial position, enhance its capital structure and create a platform from which to achieve its long-term growth strategy.  

To reinforce its efforts to improve the Company’s financial position, support operational performance and execute long-term investment plans, Emaar the Economic City will implement other key pillars progressing the Capital Optimisation Plan announced previously, which include:

  • Pursue the receipt of an SAR 1.0 billion shareholder loan from PIF that can be converted into equity, which is expected to have significant positive impact on reducing EEC’s future interest burden and enable funding key growth projects while maximising investment returns .
    • Restructuring and syndication of EEC’s existing bilateral credit facilities amounting to SAR 3.8 billion. This will re-align the repayment schedules for EEC’s bank debt facilities to match the Company’s investment plan, turnaround strategy and liquidity profile, reducing its existing financing costs.
  • Conversion to share capital of SAR 4.0 billion of EEC’s debt to PIF to significantly de-leverage the Company’s balance sheet and reduce interest expense with the added benefit of shoring up its share capital position. 

It should be noted that the debt conversion remains subject to regulatory and shareholder approvals, while the restructuring and syndication of the existing bilateral credit facilities and PIF’s new shareholder loan are subject to finalization of, and entry to, binding long-form documentation. EEC will make further announcements to the market in due course. 

Emaar the Economic City (EEC) is the master developer of the city and acts as the master planner, primary infrastructure developer, enabler and facilitator of KAEC. EEC is a Saudi Exchange-listed public joint stock Saudi company established in 2006.

King Abdullah Economic City (KAEC) is an emerging destination centrally located on the Red Sea coast of Saudi Arabia with over 42km of pristine coastline. Located 110 km north of Jeddah, KAEC is approximately 185 square KM city anchored by King Abdullah Port—recently named by the World Bank as the most efficient port in the world—and KAEC Industrial Valley that is focused on light manufacturing in addition to the largest Special Economic Zone in KSA targeting to localize the Automotive industry and attract supporting products and services in its economic eco-system as well as light manufacturing and logistics services.

Over 120 local and multinational companies have established facilities in KAEC, engaging in diverse activities ranging from advanced logistics to automotive, pharmaceuticals, FMCG, packaging, and building materials manufacturing. KAEC is directly connected to the Haramain high speed railway network and the Saudi National Highways grid, making the city a key node along the Red Sea economic corridor.

KAEC is also positioning itself as a modern tourism destination which includes several hotels and the award-winning Royal Greens international tournament golf course, with other top tier resorts currently under development. The city has developed multiple lifestyle residential communities to ensure inclusion of all social classes for its growing population of full-time residents and second-home owners, and enhanced quality of life.

With its strategic location, advanced infrastructure and investor-friendly regulation, KAEC is a ready-made platform for Saudi Arabia’s Vision 2030 initiatives. A testament of the country’s commitment to public-private partnership, KAEC is actively contributing to national objectives embodied in Vision 2030, from attracting foreign direct investment to developing the tourism sector, promoting sports, entertainment and arts, creating new jobs, and growing non-oil exports.

KAEC welcomes government initiatives, third party investors, real estate developers and operators to realize their projects and ambitions in the City. 

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