Emaar The Economic City unveils SAR8.7bn COP, focuses on transformation

Emaar The Economic City (EEC), the master developer of King Abdullah Economic City (KAEC), announced a SAR8.7bn capital optimisation plan (COP) aimed at driving a strategic turnaround aligned with Saudi Vision 2030.

KAEC is an emerging destination centrally located on the Red Sea coast of Saudi Arabia stretching over 42 kilometres.

The area is also home to the King Abdullah Port — recently named by the World Bank as the most efficient port in the world — and KAEC Industrial Valley.

Plan approved by board

The plan, approved by EEC’s board, is designed to stabilise EEC’s financial platform and position the company for long-term growth.

The strategy will focus on key sectors such as industrial and logistics businesses, non-industrial knowledge-based sectors, tourism, and residential real estate.

Fahad Al Saif, chairman of EEC, commented: “EEC stands at a vital inflexion point, as we pivot from a period of transition to one of opportunity. The implementation of the COP, which underpins EEC’s board-approved strategy, will enable the company to capitalise on available opportunities to align its direction with Saudi Vision 2030.

“It also provides the blueprint for a stable platform for growth, focused on unlocking the full potential of KAEC and enhancing the sustainability of our business. We are setting the stage for a transformation that will not only drive value creation, but also redefine our role in the kingdom to achieve the goals of Vision 2030.”

Emaar The Economic City’s COP includes:

– Restructuring SAR3.8bn in debt with Alinma Bank, Saudi Awwal Bank, Banque Saudi Fransi, and Saudi National Bank into a Shari’a-compliant syndicated facility.
– Conversion of SAR4bn in debt to share capital, including SAR2.9bn from the Ministry of Finance and SAR1.1bn in loans from PIF, reducing EEC’s leverage.
– A new SAR1bn convertible shareholder facility from PIF to support liquidity and future growth initiatives.
– A capital decrease to offset accumulated losses, subject to regulatory and shareholder approvals.

Growth plan: Achieving strategic priorities

The company’s CEO Abdulaziz Ibrahim Alnowaiser noted that the plan strengthens EEC’s balance sheet and enables the company to pursue transformative initiatives.

As part of its strategy, the developer aims to enhance KAEC’s industrial, tourism, and real estate offerings, with notable projects underway, including a 45,000-seat stadium and multiple hospitality developments.

The company’s strategic focus encompasses both real estate and operational excellence. The company’s real estate business is built on three core pillars: city master development, real estate development, and asset management. In these areas, the developer aims to attract and retain reputable real estate developers and investors, while optimising the KAEC master plan for greater efficiency.

Signature projects will be selectively executed, either independently or through partnerships, as the company upgrades and monetizes its existing real estate inventory. Additionally, EEC seeks to enhance asset performance by collaborating with top-tier operators.

For the special economic zone (SEZ) operations, EEC plans to leverage its current Industrial Valley tenants to attract new businesses, further boosting the city’s economic ecosystem.

Looking ahead, EEC’s longer-term strategy is centred on achieving positive cash flows through targeted investments in residential projects and expanding its asset management business to drive sustainable performance. The company also remains committed to upgrading KAEC’s infrastructure, creating a more stable and efficient operating environment that encourages further investment.

EEC has engaged Moelis & Company as an independent advisor, SNB Capital for the capital decrease and debt conversion, and Khoshaim & Associates for legal advisory services.