Rabigh Refining and Petrochemical Company (Petro Rabigh), one of the largest companies in the Kingdom's petrochemical sector, announced a significant development in its financial performance, having received approval from the Saudi Capital Market Authority for its request to reduce its capital from SAR 21.9 billion to SAR 16.7 billion. This strategic move aims primarily to offset a portion of the company's accumulated losses, reflecting management's commitment to improving and strengthening its financial position.
According to a statement issued by the company and published on the Saudi Stock Exchange (Tadawul) website, the reduction will be implemented by decreasing the par value of the share from SAR 10 to SAR 6.85 per share. It is worth noting that the number of shares held by each shareholder will remain unchanged, as the impact is limited to the book value per share. This accounting measure aims to restructure shareholders' equity to more accurately reflect the company's current financial position.
General context and historical background
Petro Rabigh, established in 2005, is a massive joint venture between Saudi Aramco, the world's largest oil producer, and Sumitomo Chemical, a leading Japanese chemical company. Its integrated industrial complex, located in Rabigh on the Red Sea coast, is one of the world's largest integrated refining and petrochemical complexes. Like many companies in the sector, Petro Rabigh has faced significant challenges in recent years due to fluctuating oil and raw material prices, as well as changes in global demand, resulting in accumulated losses on its financial statements.
The importance of the event and its expected impact
Domestically, this financial measure is a necessary step to enhance Petro Rabigh's financial stability. By offsetting accumulated losses, the company can clean up its balance sheet and improve its financial indicators, such as the debt-to-equity ratio, thus increasing its attractiveness to investors and lenders in the future. This measure also opens the door to the possibility of distributing dividends to shareholders should operational performance improve and future profits be realized.
Regionally and internationally, this move reflects the resilience and ability of major Saudi companies to adapt to volatile global economic conditions. It also underscores the strength of the Saudi Capital Market Authority's regulatory framework in supporting listed companies to implement financial restructuring procedures transparently. The stability of a company the size of Petro Rabigh has a direct impact on global supply chains in the petrochemical sector, as the company is a key supplier of many essential products.
The company indicated that the reduction is contingent upon shareholder approval at the upcoming Extraordinary General Meeting, the date of which will be determined later. Following shareholder approval, the reduction will be effective for all shareholders holding shares at the close of trading on the second trading day following the meeting.
