Zain KSA plans rights issue
Zain plans to raise $1.2bn to fund the “next phase” of its growth strategy
Zain KSA, a unit of Kuwait's biggest mobile phone company, has said it plans to raise SR4.4bn ($1.2bn) through a rights issue to fund the next phase of its growth strategy in Saudi Arabia.
Ahead of this, the Riyadh-based firm said it is seeking investor approval to reduce its share capital to SR7.3bn from SR14bn.
"Given the growth potential of the Saudi telecommunications market and our plans to capture a growing share of this opportunity, we intend to seek shareholder approval to raise additional capital to fund the next phase of our growth strategy," said Dr Saad Al Barrak, CEO of Zain KSA.
The number of shares will drop to 732.8 million after Zain KSA eliminates one share for every 2.096 shares held, the company said in a statement to the Saudi stock exchange.
"The rationale for implementing the capital reduction is to eliminate Zain KSA's accumulated losses and potentially increase the trading price of its shares above par," the firm said.
Zain KSA has more than seven million customers. According to Bloomberg data, the operator has had losses since it first reported results in the first quarter of 2009. The stock has declined 17% this year.