Fitaihi Holding Group announces the signing of a non-binding Memorandum of Understanding with the board member Dr. Mohammed Fitaihi (a related party)
Share this: Facebook Twitter LinkedIn
| ELEMENT LIST | EXPLANATION |
|---|---|
| Introduction | Fitaihi Holding Group announces the signing of a (non-binding) Memorandum of Understanding with the executive board member Dr. Mohammed Ahmed Hassan Fitaihi (a related party) to sell the Group’s 80% stake in the capital of its subsidiary (Luxury Goods Trading Company Limited) to Dr. Mohammed Fitaihi, who owns 20% of the capital of this subsidiary, and he is its general manager. |
| Memorandum Signing Date | 2020-06-10 Corresponding to 1441-10-18 |
| Counterparty | The executive board member Dr. Mohammed Ahmed Hassan Fitaihi (a related party) |
| Memorandum Subject | Selling of the 80% stake of Fitaihi Holding Group in the capital of its subsidiary (Luxury Goods Trading Company Limited) to the executive member of the board of directors Dr. Mohammed Ahmed Hassan Fitaihi (a related party) who owns 20% of the capital of this subsidiary, and he is its general manager. |
| Memorandum Duration | Six Gregorian months from the MOU signing date |
| Related Parties | Dr. Mohammed Ahmed Hassan Fitaihi (Executive Board Member) is a related party and owns 20% of the capital of the subsidiary company (Luxury Goods Trading Company Limited), and he is its general manger. |
| Financial Impact | Both parties initially agreed that the total value of this potential transaction (conditional on the approval of the shareholders’ General Assembly at its upcoming meeting) amounting to 14.36 million SAR, will be payable by Dr. Mohammed Fitaihi, as follows: 1- Paying a down payment amounting to 8.62 million SAR, equal to 60% of the total value of the sale transaction, after the approval of the General Assembly and signing of the sale contract 2- Paying the remainder of the transaction amount, 5.74 million SAR, equivalent to 40% of the total value of the sale transaction, through obtaining gold and jewelry merchandise (selected by Fitaihi Holding Group) from the subsidiary (Luxury Goods Trading Company Limited) at its fair value as of the receiving date of the selected merchandise The financial impact of this transaction will appear on the financial results of the company through the duration of this potential transaction. Worth mentioning that the financial impact until April 30th, 2020 is a loss of 1.32 million SAR (the Group’s share in the financial results of the this subsidiary), while the decrease in the value of this investment amounts to a loss of 4.69 million SAR that will be registered upon the approval of the GA on this sale transaction. The net losses of the subsidiary (Luxury Goods Trading Company Limited) reached 1.58 million SAR in Year 2019, compared to a net loss of 3.26 million SAR in Year 2018. The losses amounted to 866 thousand SAR during the first quarter of Year 2020, compared to losses of 451 thousand SAR during the first quarter of Year 2019. |
| Additional Information | 1- KPMG Company, an independent party, evaluated the subsidiary company (Luxury Goods Trading Company Ltd.) as of April 30, 2020, based on a mandate from the Board of Directors of Fitaihi Holding Group, in preparation for selling its 80% stake in the share capital of this subsidiary. 2- The result of this evaluation carried out by KPMG company is that the equity value range of (Luxury Goods Trading Company Limited) is between 17 million to 18.9 million SAR. 3- The Board of Directors of Fitaihi Holding Group approved the average of the above equity value range of this subsidiary, an amount of 17.95 million SAR as of April 30th, 2020. 4- The subsidiary (Luxury Goods Trading Company Limited) has been founded by Dr. Mohammed Ahmed Hassan Fitaihi in 2004, to operate in the wholesale and retail sector, in precious metals and stones, and owns the brands (Baby Fitaihi), (M. Fitaihi) and (Mamluki). It has 20 branches in the KSA, and two in the United Arab Emirates. 5- Worth mentioning that this potential transaction is part of the Group’s strategy to reduce investment in the retail sector, focus on more profitable activities, and restructure its main sectors. 6- The signing of this (non-binding) Memorandum of Understanding is a recommendation and initial approval by the Group’s Board of Directors to conclude the aforementioned sale transaction. Details of this potential transaction will be submitted to the upcoming General Assembly Meeting of the Group’s shareholders for approval. |
