Julphar’s Shareholders Approve Capital Restructuring
On 9 April 2020, the shareholders of Gulf Pharmaceutical Industries (JULPHAR), one of the largest pharmaceutical manufacturers in the Middle East and Africa, approved the planned capital restructuring at the company’s annual general assembly (AGM).
Julphar’s Board of Directors recommended the capital restructuring in January 2020, and called for the AGM to pass a special resolution for a capital reduction followed by a capital increase by way of rights issue. Aiming to strengthen the company’s capital position and improve its debt profile, the rights issue will increase the share capital of the company by up to AED 500 million through an issuance of new shares with a nominal value of AED 1, after having extinguished the company’s losses.
The capital restructuring is subject to final approval from the Securities and Commodities Authority (SCA).
Following comprehensive changes to the Board and the executive management team in 2019, Julphar is executing a comprehensive transformation program, encompassing market re-entry plans for Saudi Arabia and Kuwait, an expansion of its product portfolio, investments in quality control systems, and the implementation of a cost optimization initiative with a view to returning to profitability and rebuilding its leading market position.
In 2019, in addition to unfavorable market conditions, Julphar’s operations were adversely impacted by a temporary suspension of the export of its products to Saudi Arabia, Kuwait and Oman. Exports to Oman were resumed in March 2020, and the company is awaiting final results from inspections conducted by the Gulf Health Council and SFDA and expects the temporary ban in the remaining two markets to be lifted in due course.
Commenting on the capital restructuring, Dr. Essam Farouk, Chief Executive Officer at Julphar, said: “We thank our shareholders for their vote in favour of this capital restructuring, which is reflective of their continued trust and their continuous support of our pledge to deliver high-quality, safe and effective products to our customers. The capital restructuring will mark a milestone in the transformation that is underway at Julphar, which has the clear objective to restore our position as a leading regional pharmaceutical company within three years.”
He added: “The recent relaunch of over 80 of our products in Oman demonstrates our commitment to serving all markets in the region. In the months to come, we will hold course and continue to upgrade our quality control framework as part of a large-scale review of our operating procedures and cost structure.”
Earlier in April, Julphar announced the appointment of Dr. Essam Farouk as the new Chief Executive Officer.
The Board will keep the shareholders and public up to date with all the developments of the capital restructuring and will announce the key dates for the capital increase and rights issue as well as the terms and conditions of the rights issue in due course, including the dates of the trading and subscription periods.