EEC’s Capital Optimization Plan to Boost Financial Health and Growth
Saudi developer Emaar The Economic City (EEC) has launched a SR8.7 billion ($2.32 billion) capital optimization plan to tackle financial challenges and promote growth. CEO Abdulaziz Al-Nowaiser explained that this initiative addresses a severe revenue drop and substantial net loss increase.
The plan includes converting SR4 billion of debt into share capital to reduce leverage and interest expenses, enhancing financial stability. EEC, the master developer of King Abdullah Economic City (KAEC), aims to invest in key projects and maintain premium city operations.
Al-Nowaiser emphasized the plan’s holistic approach to stabilizing finances while continuing investments in growth projects to create sustainable shareholder value. EEC has made significant strides in business development in early 2024 and anticipates further progress.
Strategic Overhaul
The need for this plan arose after EEC reported an 82% revenue drop and a 460% increase in net loss in Q2 2024. Al-Nowaiser, with a Master’s degree in Accounting, stressed the plan’s role in overcoming high debt levels and interest expenses to ensure long-term sustainability.
Vision 2030 Alignment
Aligning with Saudi Vision 2030, EEC’s strategy focuses on transforming KAEC into a major industrial, logistics, and tourism hub. Efforts include developing residential communities and enhancing visitor services to make KAEC a premier tourism destination.
Financial Stability
The plan features a SR3.8 billion debt restructuring involving bank syndication to align repayment schedules with EEC’s investment needs. Converting SR4 billion of debt into share capital, including a SR2.9 billion facility from the Ministry of Finance, aims to de-leverage the balance sheet and reduce interest expenses.
Additionally, a SR1 billion new shareholder facility from PIF will bolster liquidity, supporting critical growth projects. A planned capital decrease will stabilize the balance sheet by eliminating accumulated losses without affecting operations.
Future Prospects
EEC is advancing high-profile projects within KAEC, including a 45,000-seat stadium set to open by 2032. This multi-functional hub will host major events like the FIFA World Cup 2034 and enhance KAEC’s status as a sports, entertainment, and tourism destination.
Other notable projects include a waterfront resort with Vivienda, a luxury eco-friendly resort with Envi, and the Rixos at Emerald Shores project with FTG Development. These initiatives will elevate KAEC’s profile and support long-term growth.
Strategic Priorities
EEC’s strategic priorities encompass real estate development and asset management. Goals include attracting reputable developers, executing an efficient master plan for KAEC, and improving asset performance. The company aims for positive cash flows, residential project investments, and asset management growth.
Enhancing KAEC’s utilities and infrastructure remains a priority to create a stable operating model for investors and residents. With its strategic Red Sea coast location and proximity to King Abdullah Port, KAEC is well-positioned for business attraction and economic growth.
Committed to Vision 2030, EEC supports national objectives like economic diversification and job creation. The company aims to align its efforts with broader goals for a successful future, contributing to Saudi Arabia’s economic transformation.
“By creating a strong financial footing, we are in a position to enable a ‘thriving economy’ built on diversification and growth,” Al-Nowaiser concluded.