Emaar EC assigns Finance Ministry loan to PIF, signs 2 agreements

Emaar The Economic City (Emaar EC) received on Sept. 5 a notice from the Ministry of Finance regarding the ministry’s loan assignment agreement with the Public Investment Fund (PIF), according to a statement to Tadawul.

Under the agreement, the remaining loan amount of SAR 2.91 billion, as on June 1, 2024, owed to the ministry, together with the related interest and fees, will be assigned to the PIF.

Therefore, the three parties inked on Sept. 7, a mortgage transfer to reassign the ministry’s mortgages to the PIF.

The MoF had earlier approved Emaar’s debt restructuring request by granting an additional one-year grace period until June 1, 2025, in addition to capitalizing the interest due in 2024 amounting to SAR 191.78 million, as part of the reassigned loan.

Upon the debt reassignment, Emaar will have no debt owed to the Ministry, and there will not be any related financial impact.

The PIF is a related party and a major shareholder in the company.

In a separate statement to Tadawul, Emaar EC announced inking a non-binding term sheet on Sept. 7 with the PIF on a potential shareholder loan at SAR 1,000 million maximum

Pursuant to the term sheet, both parties agreed to negotiate a potential shareholder loan of up to SAR 1,000 million and agreed on the preliminary provisions. Both parties also agreed that the shareholder loan will include an option for the PIF to convert the outstanding amounts under the shareholder loan to shares within the company’s capital, subject to the approvals of the relevant regulatory authorities and the approval of the company’s extraordinary general meeting (EGM).

The company will announce any material developments in due course including the final legally binding agreements with the PIF and the details thereof.

The term of the MoU was not determined, subject to finalizing the necessary approvals and signing the legally binding agreements between both parties.

Further, Emaar EC announced its financial restructuring plan aimed at boosting its ability to move forward with growth plans, according to a Tadawul statement.

This includes bank facilities rescheduling, as the company signed a non-binding term sheet on Sept. 7, to roll over its existing facilities with Alinma Bank, Saudi Awwal Bank (SAB), Banque Saudi Fransi (BSF), and Saudi National Bank (SNB).

The deal is to reschedule all the outstanding facilities worth approximately SAR 3.471 billion owed by the company to such banks. The terms will be consolidated under a single unified agreement. As part of the rescheduling, the banks will also provide the company with new credit facilities amounting to nearly SAR 301.4 million.