Saudi cement firm postpones capital reduction plan amid private sector push

DUBAI: Saudi Arabia's Yanbu Cement Co said on Monday it was postponing a recommendation to decrease its capital to support Saudi government plans requiring the private sector to invest in the local economy.

Yanbu Cement, listed on the Saudi stock exchange Tadawul, had said in January its board had recommended a capital reduction to 1 billion riyals ($266.65 million) from 1.575 billion riyals as the capital exceeded the company's needs.

The capital decrease would have happened by cancelling 36.5% of its shares and compensating shareholders.

But the firm decided to postpone the plan "in line with the private sector partnership reinforcement program" announced by Saudi Arabia's Crown Prince Mohammed bin Salman last week, it said in a bourse filing on Monday.

The programme envisages local companies - led by Saudi oil giant Aramco and petrochemical firm SABIC - investing 5 trillion riyals by 2030 to diversify the economy.

The biggest participating companies have been asked by the government to lower their dividends in order to increase capital spending, Prince Mohammed said.

Yanbu said it was no longer pursuing a capital reduction "to benefit from the company's solvency to support the objectives of this program and invest in promising local investment opportunities."

Companies that will participate in the investment programme have been promised incentives such as subsidies and soft loans from development institutions, but cuts in dividends risk dimming the allure of local stocks for investors, analysts have told Reuters.