JEDDAH, 1 May 2006 — The Saudi Basic Industries Corp. (SABIC) announced yesterday that it had signed an agreement to establish an SR12 billion ($3.2 billion) petrochemical company and that it would offer a 45 percent stake to the public.
In a statement posted on the Tadawul website, the petrochemical giant said it would hold a 35 percent stake in the new firm, Saudi Kayan Petrochemicals Company, while SABIC’s partner Kayan Petrochemicals will own 20 percent and the remaining 45 percent will be put in initial public offering (IPO) which is expected to be launched within three months.
Based in Jubail Industrial City, the new company is designed to produce four million metric tons of petrochemicals and chemicals annually, said SABIC Vice Chairman and Chief Executive Officer Mohamed Al-Mady. He said that the Saudi Kayan Petrochemicals Company would go on stream by 2009, adding that the company would supply new types of petrochemicals, which will be produced in the Kingdom for the first time. “This will open new horizons for downstream industries,” Al-Mady said. SABIC signed a memorandum of understanding with Kayan in January for its participation in the project as a strategic partner. The announcement gave a boost to SABIC stocks yesterday. Its shares jumped 2.70 percent to SR190.25.
SABIC has recently approved an increase of capital to SR25 billion by distributing one share for each four shares held to shareholders and cash dividends of SR23 per share.