AlGosaibi Shopping Assets?

AlQabas newspaper has two articles on reports of potential asset sales by AlGosaibi.  Both are based on articles in Akhbar AlKhalij AlIqtisadi.

The first concerns the flagship Pepsi business.

As per unnamed sources within AlMarai, they are in negotiations with Ahmad Hamad Gosaibi and Brothers ("AHAB") to purchase the Pepsi factory in the Eastern Province, the bottling rights, and installations.  These include as well the bottling (canning) plants in AlDammam and AlKhobar and the can factory in Jeddah.  Not included in the contract are bottling (canning) plants in Jabal Ali (Dubai) or in Jordan or Tunis.  No details were given about the size of the contract.

The article goes on to say that one motive for the sale is that Pepsi Co is considering withdrawing the Pepsi agency/franchise in the Eastern Province from AHAB due to its financial problems.

As a side note, those who follow affairs in the Kingdom know that currently there is a big flap going on about the increase in the prices of Pepsi products - in some cases 50%.  The Ministry of Commerce is investigating the increases.  By the way the higher outrageous price is SAR2 per can (roughly US$0.53).

The second article concerns their shares in National Gas and Industrialization Company ("Gasco").  According to the article, AHAB owns 4% of the company and is looking to sell its shares.  No potential buyer was named.  Gasco is owned 70% by Sabic with 30% owned by various Saudi companies.  The Company has 75 million shares.  This would make AHAB's holding 3 million shares.  At today's closing price of SAR23.7 per share, AHAB's stake would be worth SAR 71.1 million (roughly US$20 million) somewhere around one half month's interest on US$10 billion of debt.

Of the two the Pepsi sale has the larger cashflow potential.  But it's unclear why AHAB's financial problems would also not be a motive for Pepsi to cancel their agency outside the Kingdom, unless of course there is no cash constraint on the ex-Kingdom operations.

The Gasco sale seems too little to be of consequence in the context of a US$10 billion aggregate debt.  Maybe it is the visible tip of a larger program of asset sales.  Or perhaps it's for working capital.