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Riyadh: Abdulmohsen Alhokair Group for Tourism and Development, one of the largest hotel companies in Saudi Arabia, has received approval from the Capital Markets Authority to cut its capital by 46%.

Alhokair Group’s plans include reducing the company’s share capital from 650 million riyals ($173 million) to 315 million riyals, according to a CMA statement.

The company said the move was to “amortize 98% of accumulated losses”,

The capital reduction is subject to the approval of the company’s extraordinary general meeting and the completion of necessary regulatory procedures.

The company will allow shareholders to vote on the proposed capital reduction by publishing a disclosure document on the proposed method and impact before the date of the EGM.

Approval by the CMA should not be construed as an endorsement of the feasibility of the capital reduction. Project approval only represents compliance with the regulatory requirements set forth in the Capital Markets Law and its implementing regulations.

It added that Yaqeen Capital has been appointed as financial advisor to manage the capital reduction process and all related procedures.

In the first half of 2022, the Group’s loss narrowed by 49% compared to the same period of the previous year.

The Saudi hotel giant managed to cut losses to 66 million riyals from 130 million riyals a year earlier.

The decrease in losses was mainly due to a 6.4% increase in revenue to 344 million riyals from 323 million rials a year earlier.

During the six-month period, Alhokair’s different divisions saw growth, with revenue from the hospitality and entertainment divisions rising 4.6 percent and 9.2 percent, respectively.

By the end of June, the group’s accumulated losses reached 52.1% of capital, attributed to the impact of the pandemic and the emergence of the Omicron variant.

Shares in Alhokair were up 2.09 percent at Rs 10.8 per share at the open of Monday’s trading session, compared with the previous close of Rs 10.54 as of 10:30 am Saudi time.

Founded in 1975 under the leadership of Sheikh Abdulmohsin Alhokair, the group has been investing in areas such as entertainment and hospitality ever since.

Over the past 5 years, the group has expanded its projects to 92 entertainment centres and 35 hotels in Saudi Arabia and the UAE throughout the project life cycle.