Regulator approves plan by Saudi Arabia Fertilizers Company to raise its capital
Saudi Arabia Fertilizers Company (SAFCO) has gained approval from the kingdom's Capital Market Authority to raise its capital through the issue of one bonus share for every four existing shares held, the regulator said on Monday.
A unit of Saudi Basic Industries Corp (SABIC), one of the world's biggest petrochemical firms, SAFCO will raise its capital from 3.33 billion riyals to 4.16 billion riyals ($888 million-$1.11 billion), according to a filing on the bourse website.
The bonus share issue will be paid for by transferring 833.3 million riyals from its retained earnings, the CMA statement added.
The company said Jan. 5 it would propose the bonus share issue, at the same time as announcing it would pay a cash dividend of 3 riyals per share for the second half of 2014 - down from 6 riyals a year earlier.
No money is being raised from shareholders, who are getting the new shares for free, but the move is an accounting device which in effect boosts the company's equity and therefore supports future growth.