Saudi Cable closes on financial restructuring
Tadawul-listed company chops financial losses as discussions with lenders continue.
Saudi Cable Company faces a battle for survival despite the group slashing its loss in the first half of the year.
The Tadawul-listed company is staring at the possibility of going out of business unless it can successfully restructure over SAR 1bn ($266mn) worth of debt, it announced today.
However discussions with lenders have reached an advanced stage and terms are close to being secured, Saudi Cable said in a statement.
During the six month period ended June 30, the group suffered a net loss of SAR 7.06mn, a huge improvement on the SAR 91.7mn deficit booked during the corresponding period a year earlier.
For the quarter ended June 30 Saudi Cable squeezed a profit of SAR 0.88mn against a loss of SAR 50.57mn in the second quarter of 2014.
However its current liabilities exceed assets by SAR 680mn and accumulated losses have reached to SAR 374mn, representing 49.4% of the share capital.
“These circumstances indicate the existence of uncertainties that may cast doubt about the Group ability to continue as a going concern,” the company said in a statement to the Tadawul, the Saudi stock exchange.
“However, on the basis of a comprehensive plan management believes the operations shall continue for the foreseeable future and generate profit for the annual period ending December 31, 2015, subject to the successful restructuring of part of the Group total debt amounting to approximately SAR 1.2 billion and certain changes in business operations.”
In April the company secured an agreement on the Indicative Restructuring Terms with a consortium of three banks for debt amounting to SAR 640mn.
The conclusion of this restructuring will provide joint lenders certain additional securities and rights on some of the group assets. As at June 30, 2015, the relevant agreements are being formulated and the company is in the process of fulfilling revised restructuring requirements, Saudi Cable said.
The company is also progressing towards restructuring another overdue loan amounting to SAR 77mn from an independent bank that has shown interest in joining the consortium and agree on the similar terms of restructuring.
Moreover the company has been able to defer loans from a Development Financial Institution (DFI) amounting to SAR 112.9mn for a further two years despite breach of loan covenants.
The legal documentation for both of these arrangements have not been completed as yet.
Despite securing initial terms with lenders, Saudi Cable cautioned that the outcome of the restructuring is still uncertain and dependent on fulfilling additional requirements and reaching formal loan agreements.