Jabal Omar Development Company plans to issue new ordinary shares

Jabal Omar Development Company (JODC) in Saudi Arabia, secured approval from the shareholders for issuing new ordinary shares in the JODC to the unitholders of the Alinma Makkah Real Estate Fund (FUND) and in exchange will extinguish all debts owed by the Company to the and settle all rights and obligations related to the Fund.

As part of the landmark and strategically significant transaction, JODC will be reducing its liabilities by $1.41 billion, which is primarily made up of rent payments and other obligations owed to the Fund.

In return, the Company will issue 225,134,162 new ordinary shares to the FUND’s unitholders. As part of the deal terms, the legal ownership of the assets in the FUND, which is made up of three hotels and two commercial centers in Phase 1 of Jabal Omar, will be transferred back to JODC.

JODC is one of the largest real estate developers in Saudi Arabia and the master developer of the iconic mega mixed-used project in Makkah.

JODC Looking at New Opportunities

In his comments, Saeed Al Ghamdi, Chairman of JODC, said: “We look forward to welcoming our new shareholders and want to reaffirm the Company’s determination to deliver sustainable value by executing on its comprehensive transformation strategy, enabling JODC to capture attractive opportunities in the Kingdom’s booming Hajj and Umrah and tourism sectors.”

JODC CEO Khaled Al Amoudi, CEO of JODC, said that the transaction was the largest and most significant transaction within the company’s comprehensive capital structure optimization plan. Its successful outcome will set us on a path towards a better, and more sustainable tomorrow.

“This transaction will see our liabilities drastically shrink, our balance sheet deleveraged, and our liquidity profile significantly improve. It will free up $143.80 million in cash and it will be allocated to more productive, value-enhancing use. We have turned a critical corner and are on an accelerated journey towards our next phase of growth,” he added.

The shareholders’ extraordinary general meeting (EGM) was held on 25 August 2022 and comes at a crucial time for the company, which reported a six-month revenue of $104.12 million, nearing pre-pandemic levels.

For over 18 months, the company, which also reported improving operating profit in the six-month period, has been executing a companywide operating, organizational and financial transformation plan, to enhance its efficiencies, and reduce its costs and liabilities, making it a more agile, financially robust and resilient company.

The transaction is subject to the satisfaction of all the conditions set out in the transaction agreement, the company added.

According to Reuters, JODC has agreed in October last year to restructure a $1.25-billion loan from Saudi British Bank and Samba Financial Group, which is now Saudi National Bank (SNB) after its merger with National Commercial Bank. The facility was increased to $1.57 billion and its maturity extended to 2030. Saudi Arabia’s finance ministry, which guaranteed 1.6 billion riyals in financing for JODC in March 2021, has previously told Reuters the company is developing projects of “strategic importance.”’