A plan introduced earlier this year by Riyadh, Saudi Arabia-based seafood firm Saudi Fisheries Company (SFICO) to raise its capital base by 500 percent through a rights issuance agreement has collapsed after failing to garner enough shareholder backing in accordance with Saudi corporate law.
Aiming to get the plan approved, the company convened an extraordinary general assembly meeting on 27 September; however, only a quarter of the firm’s shareholders attended, far below the required 50 percent for any such resolution to be deemed valid.
SFICO said in a statement to the Saudi Stock Exchange that the plan, which was approved by the Saudi Arabian Capital Markets Authority in April, would have raised the firm’s capital by SAR 335 million (USD 88.9 million, EUR 80.8 million) through the issuance of 33.5 million new ordinary shares. The new shares were to be offered at a price of SAR 10 (USD 2.65, EUR 2.41) per share.
The company planned to use the capital raise to settle accrued expenses, repay loans and settle up with creditors, set aside a chunk for working capital financing purposes, and more.
Once the plan fell through, SFICO held an emergency meeting in early October, where it approved a new plan to seek alternative capital restructuring and other operational shifts.
The failed rights issuance came just as the company recorded a 100 percent decline in sales for the nine-month period that ended 30 September.
The company attributed the total dropoff in sales to the “suspension of the group's commercial activity as part of its restructuring and the sale of operating assets of the fish business to an external party, in line with management's plan to reassess the operating strategy and focus on activities with higher economic viability.”
To ensure its liquidity needs are met, SFICO is relying on the completed sale of a 51 percent controlling stake in its wholesale and retail fish and shrimp trading subsidiary Al-Haridha National Aquaculture to the Saudi Arabian Rubyan Aquaculture (SARA) National Trading Company.
The transaction, which includes transferring the Al-Haridah project's land lease, licenses, assets, and related contracts, is valued at SAR 33.2 million (USD 8.8 million, EUR 7.6 million), with the financial impact of the sale expected to hit starting in 2027.
