In a significant strategic move as part of its efforts to restructure its finances, Saudi Cable Company it has provided a bank guarantee to the Saudi Industrial Development Fund (SIDF) totaling SAR 106.35 million. This guarantee, issued through Saudi Investment Bank, secures the company's outstanding debt to the Fund and represents a major milestone in the company's recovery plan.
Historical background and context of the procedure
Saudi Cable Company is one of the oldest industrial companies in the Kingdom and the Middle East, having been established in 1975 and playing a pivotal role in developing local and regional infrastructure. However, in recent years, the company has faced financial and operational challenges that led to its initiation of financial reorganization proceedings under the Saudi Bankruptcy Law. This process aims to enable the company to restructure its debts and improve its capital structure to return to a path of growth and profitability. This guarantee is a key component of the company's commitments under the proposed financial reorganization it is currently implementing.
Details and conditions of the bank guarantee
According to the official statement issued by the company and published on the Saudi Stock Exchange (Tadawul), the bank guarantee remains valid until December 25, 2026. The agreement outlines clear conditions for the Fund to liquidate the guarantee; this will occur if the company fails to meet its obligations before December 1, 2026, or if the company's request to increase its capital through a rights issue, a key pillar of the financial rescue plan, is canceled. The agreement also includes the possibility of extending the guarantee's validity at the Fund's request, providing additional flexibility for both parties. To further enhance confidence in this procedure, a personal guarantee was provided to the bank by Board Member Ibrahim Al-Rajhi.
Importance and expected impact
This measure is of paramount importance on several levels. Domestically, it demonstrates the support provided by the Saudi Industrial Development Fund to vital national companies, aligning with the goals of Vision 2030 to strengthen the industrial sector and diversify the economy. For Saudi Cable Company, securing this debt represents a crucial step towards restoring investor and creditor confidence, paving the way for the successful completion of a capital increase that will provide the necessary liquidity to finance operations and future expansion. This development also reflects the current management's commitment to correcting the company's financial trajectory and fulfilling its obligations, which could positively impact the company's stock performance in the financial market.
