Chemanol shareholders vote July 14 on 77.8% capital reduction

Shareholders of Methanol Chemicals Co. (Chemanol) will vote on July 14 on a board recommendation to cut the company's capital by 77.8%, from SAR 1.35 billion to SAR 300 million.

The reduction, which requires approval at an Extraordinary General Meeting (EGM), would cancel 105 million shares. Chemanol said the move is designed to absorb accumulated losses that have eroded the company's capital base.

Chemanol, a Saudi-listed petrochemical producer, has struggled with weak margins in the methanol and derivatives market. The capital cut does not involve a cash return to shareholders. It reduces the par value of outstanding shares without changing the ownership structure.

Saudi companies that post sustained losses often turn to capital reductions as a first step before a potential rights issue or restructuring. The July 14 vote will determine whether Chemanol proceeds with the write-down or seeks an alternative path.

If approved, the new share count would be roughly 30 million shares, down from 135 million. The company's stock has traded near SAR 30 in recent sessions, giving it a market value of about SAR 4 billion before the cut. Post-reduction, the share price would adjust upward to reflect the smaller float, though the economic value per shareholder remains unchanged.

Chemanol did not disclose plans for a subsequent capital increase. The EGM agenda includes only the reduction proposal and related amendments to the company's bylaws.