Kingdom Holding issued a press release which provided additional details on its proposed capital reduction as well as announcing that Amir AlWaleed was donating 180 million shares of his personal holdings of Citibank to KHC.
- The 180 million Citibank shares represent an immediate profit for KHC of some SAR2.24 billion (roughly US$597 million).
- The capital reorganization is designed to "enable KHC to distribute dividends to the Company’s shareholders". Earlier post here, he says while patting himself on the back vigorously.
Both moves are portrayed as evidence of commitment to KHC and as steps that will enhance its borrowing capacity.
On that latter point ---
When AA labored in the DCM field, we focused on the total of shareholder funds and the quality of the amounts therein. We weren't really all that fussed about the balances in the individual equity accounts unless these affected our legal rights as lenders.
When AA labored in the DCM field, we focused on the total of shareholder funds and the quality of the amounts therein. We weren't really all that fussed about the balances in the individual equity accounts unless these affected our legal rights as lenders.
Reducing paid in capital and offsetting accumulated losses in retained earnings are just bookkeeping entries - moving money from account "A" to account "B" within equity. The total amount of equity stays the same. While it helps shareholders get dividends, I can't see that it does anything to strengthen the lenders' position.
Perhaps, this move is for local banks? Of for those "bankers" who believe in implicit guarantees?
Perhaps, this move is for local banks? Of for those "bankers" who believe in implicit guarantees?
Posts
No comments:
Post a Comment