Saudi Emaar The Economic City Launches Capital Optimization Plan

Saudi master developer Emaar The Economic City, the firm behind King Abdullah Economic City, has unveiled a SR8.7 billion (US$2.32 billion) capital optimization plan aimed at restructuring its financial framework.

The move, approved by the board, includes restructuring SR3.8 billion (US$1.01 billion) in bank debts, converting SR4.0 billion (US$1.07 billion) of debt owed to the Public Investment Fund into equity, and introducing a SR1 billion (US$266.37 million) convertible shareholder facility from PIF, according to a press release.

The plan also involves a capital reduction to offset accumulated losses, with the goal of stabilizing EEC’s financial position and setting the stage for long-term value creation.

This comes as EEC strengthens its focus to key sectors, including industrial and logistics, tourism, and real estate.

KAEC, designated as a Special Economic Zone, is set to attract more businesses and residents, further advancing Saudi Arabia’s Vision 2030 objectives.

Fahad Al-Saif, chairman of EEC, said: “The implementation of the COP, which underpins EEC’s Board-approved strategy, will enable the company to capitalize on available opportunities to align its direction with Saudi Vision 2030.”

He added: “It also provides the blueprint for a stable platform for growth, focused on unlocking the full potential of KAEC and enhancing the sustainability of our business. We are setting the stage for a transformation that will not only drive value creation, but also redefine our role in the Kingdom to achieve the goals of Vision 2030.”

The restructuring will consolidate bilateral credit facilities from lenders including Alinma Bank, Saudi Awwal Bank, Banque Saudi Fransi, and Saudi National Bank into a single Shari’a-compliant syndicated facility.

“This carefully devised plan does more than fortify our balance sheet; it sets the stage for us to seize opportunities with greater agility. As we undertake the strategic rebalancing of our financial framework, our objective is clear: to improve our leverage ratios and bolster overall financial health,” said Abdulaziz Ibrahim Al-Nowaiser, CEO of EEC.

In parallel, he revealed that the company is evaluating a series of structural and functional measures aimed at restoring EEC to full financial health, while also strengthening key relationships with stakeholders.

Additionally, it plans to periodically refresh its “long-term strategy to establish a clear roadmap” for reviving the company's ability to fulfill its core mission of developing the property and delivering shareholder value.

King Abdullah Port, a major maritime hub, is expected to drive growth, while KAEC’s infrastructure projects, including a new stadium and multiple hospitality ventures, are aimed at boosting the city’s appeal as a tourism and business destination.

In the first half of 2024, EEC made progress by attracting investors and implementing cost optimization measures, supporting the company’s turnaround efforts.

Moelis & Co. serves as an independent advisor on the debt restructuring, with SNB Capital as financial advisor for the capital decrease and debt conversion, the release added.