Frequently Asked Questions
Can you elaborate on the transaction?
● The transaction involves three stages consisting of a rights
issue of SR 6 billion, which is followed by a capital reduction,
and the distribution of Savola's entire stake of 34.52% in Almarai
to eligible Savola shareholders.
● All three stages will require EGM and regulatory approvals.
● Further material details shall be disclosed once
available.
What will be the impact on Savola’s capital structure?
● Savola aims to strengthen its financial position, pay down its
debt, and continue to invest in the growth of its portfolio.
● The aim is to achieve a more conservative leverage
ratio along with a strong and sustainable financial position.
What is the rationale of this transaction?
● The rationale is to unlock value. Over the past years, Savola’s market capitalization is approximately equal to the market value of its stake in Almarai.
Why is Savola opting for a rights issue?
● The proceeds will be used to strengthen Savola’s financial
position, pay down its debt, and invest in the growth of its
portfolio companies.
● It also enables Savola to distribute its entire stake in Almarai
to its eligible shareholders after the planned capital reduction.
At what valuation will the rights issue be conducted?
● The exact valuation has not yet been determined and will be communicated to shareholders after securing regulatory approvals.
What will be the impact of the rights issue on Savola’s shareholders?
● Participating shareholders in the rights issue will have no
dilution in their percentage ownership in Savola.
● Non-participating shareholders in the rights issue will have
dilution in their percentage ownership in Savola.
Can Savola not meet its current debt obligations through existing cashflows?
● Savola has sufficient cash flows from operations to meet its
existing debt obligation and is well within any debt covenants
stipulated by its lenders.
● The rights issue will enable Savola to strengthen its financial
position, pay down its debt, and continue to invest in the growth
of its portfolio in addition to enabling the distribution of
Savola’s stake in Almarai to eligible Savola shareholders.
● The objective of the distribution of Savola’s stake in Almarai
to eligible Savola shareholders is to unlock value for Savola’s
shareholders, who will benefit from direct exposure to the growth
potential and future dividend capacity of one of the region’s
leading food manufacturers while continuing to participate in the
future growth and value creation of the Savola portfolio.
For shareholders not participating in the rights issue, how much will their holdings be diluted?
● For shareholders not participating in rights issue:
- There will be a dilution in the percentage of their ownership in
Savola.
- They will receive fewer Almarai shares compared to participating
shareholders.
- They will benefit from the opportunity to sell their letter of
rights. The value of which will be determined as the transaction
progresses.
For shareholders not participating in the rights issue, will they still receive Almarai shares?
● Yes, they will receive Almarai shares but non-participation will result in the receipt of fewer Almarai shares compared to participating shareholders.
How and when can we subscribe to the Rights issue?
● Savola will communicate the full details once it receives the required approvals.
Given that Almarai has been a key asset in Savola’s portfolio, please explain the rationale for the distribution.
● Almarai has been the most successful investment for Savola Group
to date, with the value of Savola’s investment in the company
increasing more than 100-fold since the initial investment in
1991.
● Historically, the market capitalization of Savola has closely
tracked the market value of the stake held by Savola in Almarai.
● Going forward, Savola will focus on investing in the growth of
its core food and retail businesses and shareholders will continue
to benefit from direct exposure to this growth too.
● Savola will also continue to review strategic options to realize
value from portfolio companies that demonstrate attractive
distribution and monetization potential.
How is Almarai accounted for in Savola’s books?
● Almarai is accounted as an investment in associate. Income from Almarai flows within Savola’s operating income.
How many Almarai shares per Savola share will Shareholders receive?
● This will be determined and communicated following the receipt of the relevant regulatory approvals.
When and how will shareholders receive the Almarai shares?
● This is subject to the relevant regulatory and EGM approvals and
will take place following the rights issue.
● Further information will be communicated following the required
approvals.
What is capital reduction?
● A capital reduction is the process of reducing a company’s share capital through the cancellation of a certain number of the existing shares.
Why are you planning a capital reduction?
● Following the rights issue, Savola will perform a capital reduction at par value, reducing the number of issued shares, which will optimize Savola’s capital structure and enable the distribution of Savola’s stake in Almarai to its shareholders.
What is the investment proposition of Savola following the transaction?
● Post transaction, Savola will continue to operate as a strategic
investment holding company, operating in the food and retail
sectors in the MENAT region.
● Savola’s future unique Investment proposition includes:
- Market-leading diversified FMCG player across the Kingdom and
MENAT region.
- Resilient business model prioritizing resources to focus on core
operating business with growth potential.
- Strong cash flow generation supporting optimized capital
structure and shareholder distributions.
- Support future M&A strategy, to provide for the necessary
liquidity to fund acquisitions.
What is Savola's future vision for Panda in light of this transaction?
● As a strategic investment holding, Savola continues to assess value creation opportunities through organic and inorganic growth avenues and monetization of assets. Panda is a significant part of the Group portfolio. Shedding light on the strategic direction of Panda is relevant to provide a comprehensive view in the light of this transaction. Savola is considering listing of Panda in the future.
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