Saudi Atheeb eyes rights issue to lift balance sheet

JEDDAH: Saudi Arabia's Etihad Atheeb Telecom plans to raise its capital threefold to 1.575 billion riyals ($420 million) through a rights issue after cutting it by more than half to cover accumulated losses, the firm said in statements.

The company, which operates under the brand name GO, was awarded a Saudi fixed line services licence in 2009 and has been facing mounting losses over the past year.

Atheeb, 15 percent-owned by Bahrain Telecommunications Co (Batelco), received regulatory approval in June to cut its capital from 1 billion riyals to 400 million riyals after it accumulated losses equivalent to 95 percent of its capital.

The 60 percent capital reduction will see each 10 shares owned reduced to six, and that will be followed by the capital increase, according to company statements posted on the Saudi bourse website.

Atheeb's shares are halted under market rules for companies whose losses exceed 75 percent of capital.

"The board recommends to increase the capital from 400 million riyals to 1.575 billion riyals through a rights issue," Atheeb said.

Atheeb did not give 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.

Copyright Reuters, 2011