Atheeb Telecom plans for $420m rights issue

Saudi WiMAX operator seeks approval to increase its capital threefold.

Tags: Atheeb Telecom ( Middle East CompanyUnited Arab Emirates
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Atheeb Telecom plans for $420m rights issue Saudi Arabia-based Atheeb Telecom reduced its capital earlier in the year amid spiraling debts.
By  Nithyasree Trivikram Published  August 9, 2011

Etihad Atheeb Telecom, the Saudi Arabian fixed-wireless operator, plans to raise its capital threefold to SR1.575 billion ($420 million) through a rights issue after cutting it more than half to cover its accumulated losses, the company said.

"The board recommends to increase the capital from SR400 million ... to SR1.575 billion through a rights issue," the company said, according to the report from Reuters. However, Atheeb Telecom has not yet given a time frame for the issue but said that the board is seeking regulatory approval.

Saudi Fransi Capital, an affiliate of Banque Saudi Fransi, will act as financial adviser and lead arranger for the rights issue, said the report.

The operator, which has been facing mounting losses over the past year, received a regulatory approval in June this year to cut its capital from SR1 billion to SR400 million after it accumulated losses equivalent to 95% of its capital, the report added.

During this period, the telco was also suspended from trading on Saudi Arabia's stock exchange, as under the country's market rules, companies must be suspended from the bourse if their losses exceed 75% of their capital.

In December 2010, a posting on Saudi bourse website said that Atheeb Telecom made a net loss of SR453 million. In January 2011, Atheeb said that it planned to seek shareholder approval for a SR600 million rights issue after racking up losses amounting to 75% of its capital, or about SR750 million.

Atheeb Telecom, which is 15% owned by Bahrain's Batelco, operates under the brand name GO offering fixed voice and data services via its WiMAX network in the country. The telco was awarded afixed line services licence in 2009.

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