JAZADCO Announces Sale of Al-Reef Sugar Refinery Company Shares

Strategic Insights -

JAZADCO, through its investee company Al-Reef Sugar Refinery Company, has signed a Memorandum of Understanding (MoU) with Ethraa Holding Company to sell 100% of Al-Reef's shares. This move is expected to have a significant financial impact on JAZADCO, potentially reversing a SIDF guarantee provision estimated at SAR 100.80 million.

Key Takeaways:

  • The MoU commits Ethraa Holding Company to take over Al-Reef's full equity, providing financial guarantees to cover Al-Reef's obligations to the Saudi Industrial Development Fund (SIDF).
  • JAZADCO holds a 15% stake in Al-Reef Sugar Refinery Company, with a capital worth SAR 300.00 million, and has recorded this investment as fully written off in its latest audited financial statement dated December 31, 2024.
  • The MoU is binding on Al-Reef's shareholders, but remains non-binding on Ethraa Holding Company, contingent upon due diligence results and regulatory approvals.
  • Ethraa Holding Company will conduct an exhaustive due diligence process covering various aspects of Al-Reef's operations, with the memorandum effectively binding for 60 days from the signing date.
  • The execution of this transaction could lead to the reversal of the SIDF guarantee provision estimated at SAR 100.80 million, aligning with JAZADCO's strategy to mitigate financial burdens associated with Al-Reef's liabilities.
  • The Saudi Exchange will continue to monitor developments and provide updates as they unfold.

Statistics:

  • 100% of Al-Reef's shares will be sold to Ethraa Holding Company.
  • The capital value of Al-Reef Sugar Refinery Company is SAR 300.00 million.
  • The SIDF guarantee provision to be reversed is estimated at SAR 100.80 million.
  • JAZADCO has a 15% stake in Al-Reef Sugar Refinery Company.
  • The MoU will be in effect for 60 days from the signing date, with the possibility of extension through mutual agreement.

Sources:

  • "Saudi Exchange"
  • "Jazan Development and Investment Company (JAZADCO)"
  • "Al-Reef Sugar Refinery Company"
  • "Ethraa Holding Company"
  • "Saudi Industrial Development Fund (SIDF)"