Emaar Economic City Unveils SR8.7 Billion Restructuring Strategy
The developer behind King Abdullah Economic City takes bold steps to strengthen its financial position and align with Vision 2030.
Emaar Economic City (EEC), the developer behind Saudi Arabia’s ambitious King Abdullah Economic City (KAEC), has announced an extensive restructuring plan to address its financial challenges. The company aims to restructure its SR3.8 billion debt to banks as part of a broader SR8.7 billion capital optimization strategy.
The restructuring plan is a key element of Emaar Economic City’s long-term strategy to improve its financial stability. It includes a full conversion of SR4 billion in debt owed to Saudi Arabia’s Public Investment Fund (PIF) into equity. Additionally, a new SR1 billion convertible shareholder facility will be issued by PIF, further strengthening the developer’s financial base. PIF, which holds a 25% stake in EEC, will also implement a capital reduction to address accumulated losses, ensuring the company’s financial health moving forward.
UAE-based Emaar Middle East, which owns a 4.41% stake, remains a key shareholder alongside PIF. Market analysts view this restructuring as transformative for the company, with far-reaching implications for its future growth.
Commenting on the plan, Abdulaziz Ibrahim Alnowaiser, CEO of EEC, stated, “We are actively reviewing further structural and operational measures to ensure the company returns to full financial health. Our focus is on strengthening key stakeholder relationships while periodically revisiting our long-term strategy to create a clear roadmap for the company’s success.”
Financial Stabilization and Long-Term Growth
The restructuring is based on two years of in-depth assessments aimed at providing a comprehensive solution to stabilize the company’s financial and operational frameworks. The goal is to optimize capital structure, establishing a solid foundation for future value creation and sustainable growth.
King Abdullah Economic City, located north of Jeddah and anchored by King Abdullah Port, is rapidly emerging as a major hub for logistics and trade along Saudi Arabia’s Red Sea coastline. Spanning 185 square kilometers, KAEC is poised to become a key player in the Kingdom’s efforts to diversify its economy, a central focus of Vision 2030.
Since the beginning of the year, EEC’s stock has recorded a 13% rise on the Saudi stock exchange, despite a slight 0.22% dip following the announcement of the restructuring strategy.
Fahad Al Saif, Chairman of EEC, emphasized the pivotal moment for the company, stating, “Emaar Economic City is at a crucial turning point as we transition from a phase of restructuring to one of opportunity. This transformation will not only drive value creation but also position the company as a key contributor to the Kingdom’s Vision 2030 goals.”
Bank Debt Realignment
As part of the restructuring, EEC will align its repayment schedules with its investment strategy and liquidity profile. The SR3.8 billion in debt owed to banks will be consolidated into a new Sharia-compliant syndicated loan facility. Lenders involved in this restructuring include Alinma Bank, Saudi Awwal Bank, Banque Saudi Fransi, and Saudi National Bank.
Capital Reduction
The company also plans to reduce its capital to offset accumulated losses. This measure will enhance EEC’s financial stability without negatively impacting its operations. By improving its balance sheet, EEC aims to create more opportunities for growth in the future.
With these strategic changes, Emaar Economic City is setting the stage for its next development chapter, aligning with its shareholders’ interests and the broader goals of Saudi Arabia’s Vision 2030.