Riyadh – Mubasher: Molan Steel Company, a prominent player in the Saudi industrial sector, has announced a comprehensive strategic plan to address its critical financial position after accumulated losses reached 99.21% of its SAR 26.60 million capital.

Molan Steel reported that its losses have effectively eroded nearly the entire capital base, necessitating urgent intervention to ensure the continuity of its business operations, according to a bourse filing.

Following an initial disclosure on 29 April 2026, the company’s Board of Directors has outlined a multi-stage recovery roadmap involving operational restructuring, a capital increase through a rights issue, and a subsequent capital reduction to extinguish the entirety of its accumulated losses.

The announcement follows the company’s compliance requirements under Article 132 of the Companies Law and the specific procedures mandated by the Capital Market Authority (CMA) for listed companies whose accumulated losses exceed 50% of their share capital.

To stabilize the company’s financial health, the board has approved a turnaround plan that builds upon existing cost-restructuring and operational efficiency programs. These measures include the centralization of operations in Riyadh, the rationalization of fixed expenses, and the optimization of inventory and working capital management.

Furthermore, the company is accelerating its industrial transformation through the acquisition of Mayar International Industrial Company (Cool Master), aiming to pivot toward products and services with higher profit margins.

A pivotal component of the recovery strategy involves a two-step capital adjustment.

First, the Board has called for an Extraordinary General Assembly (EGM) to be held no later than 25 October 2026.

Shareholders will be asked to vote on the company’s continued existence and the progression of an existing file with the CMA to double the company’s capital.

The proposal seeks to increase capital from SAR 26.60 million to SAR 53.20 million through a full rights issue offering. This move is designed to inject necessary liquidity and meet the statutory deadlines prescribed by Saudi corporate regulations.

Upon the successful execution and commercial registration of the capital increase, the company intends to proceed with the second phase of the plan: a capital reduction.

The proposal involves slashing the capital to SAR 26.81 million by canceling 26.38 million shares. This accounting maneuver is specifically intended to offset and extinguish the accumulated losses in full. This stage remains subject to further regulatory approvals from the CMA and a subsequent vote by the Extraordinary General Assembly.

Molan Steel emphasized that these steps are essential to align with the regulatory framework and restore the company's balance sheet.

The management noted that there are currently no specific costs associated with the event that have deviated from previous expectations. The company has committed to providing the market with regular updates as these restructuring milestones are reached.

The proposed restructuring highlights the challenges faced by the firm in a competitive industrial landscape and underscores the Board’s reliance on shareholder support and capital market mechanisms to reset the company’s financial trajectory.