Saudi Cable inks SAR 140 mln working capital agreement

Saudi Cable Co. signed a working capital agreement worth SAR 140 million with Rawafid Al-Mustaqbal Investment Co., according to a statement on Tadawul.

This agreement includes cash financing and the purchase of raw materials to execute existing manufacturing orders. The deal aims to help Saudi Cable to increase its manufacturing capacity and maintain its relationship with one of its most important strategic customers.

Under the contract, Rawafid Al-Mustaqbal shall deposit SAR 30 million in cash into the account of Saudi Cable before Dec. 30, 2023, and will provide Saudi Cable with purchase orders of raw materials (copper and aluminum) amounting to SAR 110 million, before November 15, 2023. Purchase orders are paid, while Saudi Cable does not bear any fees related to the provision of such materials.

Meanwhile, this financing constitutes a loan of SAR 140 million for Saudi Cable, the statement added.

Rawafid Al Mustaqbal aims to capitalize this loan later in exchange for shares in Saudi Cable after obtaining regulatory approvals.

This would enable the Saudi-listed firm to efficiently manufacture strategic client orders and strengthen its position in bypassing the financial restructuring procedure which will have a positive impact on the company's interest, reputation, and presence in the cable sector at the national level.

The working capital financing agreement will be valid until the supply is completed and the required approvals are obtained, the statement indicated, expecting it to have a positive financial impact on the company and support its continuity and presence in the market in general, and on the financial restructuring proposal in particular, in Q4 2024.

Saudi Cable also noted that this agreement was approved by the financial restructuring procedure bankruptcy trustee and pointed out that it will not entail financial contributions from the shareholders.

Raw materials (copper and aluminum) will be supplied to the company’s warehouses before Nov. 30, 2023.

Rawafid Al-Mustaqbal is committed to maintaining all technical, operational, manufacturing, and administrative information of Saudi Cable, the statement referred, stating that no related parties are included in the deal.

Source : Argaam