In January 2025, Saudi Fisheries Company took a major step: it reduced its capital by 83.25% to write off accumulated losses.

Just a few months later, it was preparing for the exact opposite move: a 500% capital increase, raising approximately SAR 334.9 million through a rights issue.

Between the two decisions lies one of the most important issues in corporate finance:

Can a company be fixed by rearranging its balance sheet if the business itself remains unable to generate revenue?

This is the central idea of the case study.

The Problem Began with Operations

From 2023 to 2025, revenue contracted by approximately 92.2%, from SAR 52.2 million to about SAR 4.1 million, before the company reported zero operating revenue in the first half of 2026.

At the same time, net loss declined from approximately SAR 120 million in 2023, after restatement, to SAR 25.4 million in 2025.

On the surface, this appears to be a significant improvement.

However, the company explained that an important part of the decrease in losses resulted from scaling back operations and expenses, including selling and distribution expenses and employee costs.

Therefore, it is important to distinguish between:

A company that sells more and loses less

and

A company that sells far less and loses less because the scale of its operations has itself contracted.

Why Was the Capital Reduced?

Capital was reduced from SAR 400 million to approximately SAR 67 million to write off accumulated losses.

This process improved the appearance of shareholders’ equity, but it did not inject new cash or generate sales.

After some time, accumulated losses reappeared.

This outcome illustrates an important economic concept: accounting restructuring cannot replace operational restructuring.

What Would the Company Have Done with the New Funding?

The board of directors subsequently proposed a SAR 334.93 million rights issue.

Approximately SAR 250 million of it was earmarked for the dates trade, a dates processing plant, and logistics services, in addition to financing working capital and settling existing obligations.

This is where the nature of the decision changes.

Shareholders were not merely being asked to finance the company’s historical business; they were being asked to participate in a strategic transformation toward a business that was relatively new to the company.

This makes the investment and economic question more complex: did the company have the execution and operational capabilities necessary to make this transformation successful?

Al-Haridah: Sharing the Risk Rather Than Bearing It Alone

As another aspect of the restructuring, the company agreed to sell 51% of Al-Haridah National Aquaculture Company to Sara National for SAR 33.15 million.

Saudi Fisheries would thereby retain a 49% stake, while a new partner would join the management and operations.

Economically, the transaction can be viewed as an attempt to distribute financing and operational risks to another party, particularly since the asset’s own business had recorded losses in previous years.

However, completion of the transaction remained contingent on the transfer of the lease and licenses, making its completion one of the key variables in the company’s future.

When Governance Enters the Equation

The Capital Market Authority approved the rights issue application, but this approval did not mean that shareholders were obliged to accept the capital increase.

The final decision required the general assembly’s approval.

At the third meeting, shareholders representing 25.12% of the total shares attended, and 72.36% of them supported the increase.

However, the bylaws require 75%.

Thus, the increase did not pass.

This case provides a clear example of the difference between:

Regulatory approval of the offering procedures

and

Owners’ approval of a change to their company’s capital.

It also explains why regulations set high voting thresholds for certain decisions: they do not concern an ordinary administrative detail, but can change the ownership structure and the risks borne by shareholders.

And What About the Chairman’s Resignation?

On the same day, Chairman Abdulaziz Al-Humaid submitted his resignation from the current board, stating that the reason was “personal circumstances.”

The timing of the resignation may prompt questions, but the study avoids turning coincidence into an unsubstantiated causal relationship, as there is no official disclosure linking the resignation to the failure to pass the capital increase.

This in itself is an important lesson in company analysis:

A good analyst does not confuse what they know, what they can calculate, and what they believe may have happened.

Where Does Saudi Fisheries Stand Now?

After the capital increase was rejected, the restructuring did not end; however, the company lost a major financing tool that would have provided more than SAR 300 million net.

The theoretical alternatives include different financing, new partnerships, asset monetization, accelerating Al-Haridah’s operations, or redesigning the dates project.

However, none of these can be assumed to be available or successful in advance.

The real benchmark in the coming quarters will be simple:

Will revenue return? Will operating cash flow improve? And can the company execute the transformation without losses once again consuming its capital?

These questions make the Saudi Fisheries case about more than a share price decline or a chairman’s resignation.

It is a case about the difference between repairing the balance sheet and repairing the company itself.

Full case study:
Case Study - Saudi Fisheries Company - Prepared and Presented by Al Yamamah University Students