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RIYADH: Abdulmohsen Alhokair Group for Tourism and Development, one of Saudi Arabia’s largest hospitality firms, was granted approval by the Capital Market Authority for a capital reduction of 46 percent.

Alhokair Group’s plan includes reducing the company’s share capital from SR650 million ($173 million) to SR315 million, according to a statement by the CMA.

The company said that the move was made in order to “amortize 98 percent of accumulated losses,” 

The capital reduction is subject to the approval of the extraordinary general assembly of the company as well as the completion of the necessary regulatory procedures.  

The company will allow shareholders to vote on the proposed capital reduction by publishing a disclosure document regarding the proposed method and the impact prior to the EGM date.

The CMA’s approval should not be interpreted as an endorsement of the feasibility of the capital decrease. The approval of the project only represents the fact that the regulatory requirements as specified in the Capital Market Law and its executive regulations have been met, it said.

Yaqeen Capital has been appointed as a financial advisor to manage the capital reduction process and all related procedures, it added.

During the first half of 2022, the Group narrowed down its losses by 49 percent over the same period in the previous year.

The Saudi hospitality giant managed to bring down its losses to SR66 million, from SR130 million in the same period last year.

The reduction in losses was mainly driven by a 6.4 percent rise in revenue to SR344 million from SR323 million a year earlier.

Alhokair saw growth across its different units during the six-month period, recording higher revenue from the hotel and entertainment sectors by 4.6 percent and 9.2 percent, respectively.

The group’s accumulated losses reached 52.1 percent of capital by June end, which it attributed to pandemic repercussions and the emergence of the Omicron variant.

At the opening bell of Monday’s trading session, Alhokair saw its share price increase 2.09 percent to reach SR10.8 per share, compared to SR10.54 per share from the previous close, as of 10:30 a.m. Saudi time.

Under the leadership of Sheikh Abdulmohsin Alhokair, the group was founded in 1975 and has since invested in sectors such as entertainment and hospitality.

During the past five decades, the group has expanded its projects to include 92 entertainment centers and 35 hotels throughout Saudi Arabia and the UAE over the course of the project lifecycle.