Kingdom Holding cuts capital to cover losses

06 January 2010

Investment company receives $600m of free shares from Prince Alwaleed

Kingdom Holding, the investment company owned by Saudi billionaire Prince Alwaleed bin Talal, has said it will cut the size of its capital by 40 per cent to help make the company profitable.

The company plans to reduce its capital from $16.8bn to $9.9bn, and is expected to use the money to offset losses.

Prince Alwaleed owns 94 per cent of Kingdom Holding and the remainder of shares are traded on the Saudi Stock Exchange (Tadawul).

The Capital Market Authority, the Saudi stock market regulator, approved the request to reduce the company’s capital by 40 per cent on 5 January.

Prince Alwaleed also gave Kingdom Holding $597m worth of shares in the US’ Citigroup on the same day.

In a statement, the company said the shares and the decision to reduce its capital “will lead the company to profitability and enable Kindgom to distribute dividends to the company’s shareholders. Moreover, this move will allow Kingdom Holding to increase future borrowing capacity”.

Kingdom’s investment portfolio has been hit hard by the global financial crisis. In 2008, the company made a loss of $8.3bn, followed by a $13.4m profit in the first quarter of 2009.

In April 2009, Kingdom said it sold some of its investments, including stakes in the local Samba bank and Saudi food giant Savola Group, to reduce its debt.

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