Zain Saudi seeks capital cut

Indebted telecoms operator Zain Saudi will ask shareholders to approve cutting its capital by 66 percent to alleviate mounting losses, it said in a statement on Wednesday. This is the third time the board has announced such a plan, but the capital restructuring was sidelined by now-aborted deals to sell stakes in both Zain Saudi and parent Zain. Zain Saudi has not set a date for a shareholders\' meeting to discuss cutting its share capital to SR4.8bn ($1.28bn) from SR14bn. This will alleviate accumulated losses of SR9.2bn, or 66 percent of its paid-up capital. Bourse rules say listed firms must cut their capital if losses exceed 75 percent. The board wants to then issue 6 billion riyals of new shares. \"The rights issue will consist of raising fresh equity and the capitalisation of subordinated shareholder loans to the company,\" Zain Saudi said in a statement. The new equity will be used to to reduce bank debt and enhance the operator\'s network, it added. Zain Saudi has debts nearing SR21bn, according to its first-quarter results. These include loans from founding shareholders of SR3.8bn and a SR9.75bn Islamic facility that can be rolled over until August 2012.