Jazan Development and Investment Company (JAZADCO), the leading agricultural and fisheries investment company in the Kingdom of Saudi Arabia, announced the renewal of a Sharia-compliant credit facility agreement with Arab National Bank, in a move aimed at enhancing cash liquidity and supporting the company’s operational processes.
Agreement and financing details
According to the company's official statement on the Saudi Stock Exchange (Tadawul) website, the agreed-upon financing amount is SAR 15 million. The company clarified that the financing term extends for nine months, starting from the date of disbursement, thus providing the company with short-term financial flexibility to manage its obligations.
Regarding the guarantees provided in exchange for obtaining these facilities, Jazadco indicated that a promissory note, in addition to a mortgage, would be provided as bank guarantees acceptable to the Arab National Bank to guarantee the rights of both parties.
Funding objectives: To enhance operational efficiency
The company stated that the primary objective of renewing this agreement is to finance the direct purchase of essential materials, tools, and equipment, as well as the tanks and stock designated for aquaculture and agriculture. The financing is disbursed to support operations upon submission of an invoice copy acceptable to the bank, ensuring that the funds are used directly for the specified operational purposes.
Economic context and the importance of the aquaculture sector
This move by Jazadco comes at a time when the aquaculture and agriculture sector in Saudi Arabia is witnessing increasing interest, as it is one of the main pillars for achieving food security within the objectives of the Kingdom’s Vision 2030. Companies listed in this sector play a pivotal role in bridging the food gap and reducing dependence on imports.
Jazan Development and Investment Company is a vital company in the Jazan region, benefiting from the region's comparative advantages and its geographical suitability for fish farming and diversified agriculture. Obtaining credit facilities to finance working capital is routine and essential for companies operating in the production sectors, as it helps bridge the time gap between purchasing raw materials and the production and sales cycle, thus ensuring the continuity of uninterrupted supply chains.
Financial implications of the agreement
The renewal of the agreement with Arab National Bank reflects the high level of trust that Jazadco enjoys within the Saudi banking sector and its ability to meet its obligations. It also highlights the role of national banks in supporting private sector companies, particularly those operating in strategic sectors such as food and agriculture, enabling them to expand their operations and contribute to the GDP.
