Bloomberg News
written by Glen Carey
Tuesday January 5, 2009 14:09 EST
Jan. 5 (Bloomberg) -- Saudi Arabia’s Prince Alwaleed bin Talal, Citigroup Inc.’s largest individual investor, transferred 180 million of the bank’s shares to Kingdom Holding Co. to improve profitability and borrowing opportunities.
The shares are worth 2.24 billion riyals ($600 million), Riyadh-based Kingdom Holding said in an e-mailed statement today. Kingdom will have an “additional benefit of 675 million riyals for every $1 increase in the share price of Citigroup,” the company said.
The share transfer will help Kingdom Holding “withstand the negative repercussions of the global economic crisis,” Prince Alwaleed said in the statement. “I personally re-affirm my full and continuous support to Kingdom Holding, and my initiative to transfer part of my own Citigroup shares is an example of that.”
Prince Alwaleed personally held about 218 million Citigroup shares as of November 2008, according to data compiled by Bloomberg. He owns 95 percent of Kingdom Holding, his investment company, the data show.
The global credit crisis has hurt investment and energy companies operating in Saudi Arabia, the Arab world’s biggest economy. Kingdom Holding reported a 54 percent decline in third- quarter net income because of a decrease in returns on investments in Saudi Arabia and abroad.
‘Better Off’
“Kingdom Holding is better off if it has additional assets,” John Sfakianakis, chief economist at Banque Saudi Fransi, said by phone from Riyadh today. “Kingdom Holding lending facilities could increase if its asset base is larger, including with more Citigroup shares, as it expands its operations.”
Kingdom Holding also received approval today from the Saudi Capital Market Authority to lower its share capital to 37.1 billion riyals from 63 billion riyals, according to a regulatory statement on the Saudi bourse. The number of outstanding shares will fall to 3.71 billion from 6.3 billion.
These decisions will “lead the company to profitability and enable Kingdom Holding to distribute dividends to shareholders,” the company said in the statement. They will increase its “future borrowing capacity.”
Prince Alwaleed sold 315 million shares of Kingdom Holding at 10.25 riyals apiece in July 2007. Saudi institutional and individual investors asked for more than twice that amount in the share sale. The shares have declined more than 50 percent since their listing.
Kingdom shares ended unchanged at 4.7 riyals in Riyadh today. The company, worth 29.6 billion riyals, is ranked 12th on the Saudi bourse by market value.
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