Saudi’s Modern Mills restructures debt with US$232M Murabaha loan, eyes expansion
SAUDIA ARABIA – Saudi Arabia-based flour producer, Modern Mills, has secured an 871 million riyals (US$232 million) Murabaha loan from Saudi National Bank (SNB), a significant move aimed at restructuring its existing debt.
The 14-year, three-month loan, obtained on October 8, 2024, will replace the company’s debt with Al Inma Bank. This development was disclosed in a filing with the Saudi Exchange (Tadawul).
The company, which is also involved in the production of animal feed and bran, has issued promissory notes as a guarantee for the loan, signaling its strong commitment to meeting its financial obligations.
Beyond restructuring, the funds will also help support Modern Mills’ future growth plans, including expansion projects and meeting working capital needs.
Modern Mills is among the key players in Saudi Arabia’s flour and animal feed industry, serving the country’s growing demand for flour-based products while supporting the agricultural sector with its feed and bran production.
In addition to its financial restructuring, Modern Mills has been proactive in the capital markets. The company began listing its shares on the Main Market of the Saudi Exchange in March 2024, signaling its intent to raise capital and further solidify its market presence.
In May 2024, the company officially commenced trading on the Saudi Exchange (Tadawul) after a highly successful initial public offering (IPO).
The IPO generated a staggering SAR150bn (US$40B) in orders, with a final offering size of SAR1,178m (US$314M), underscoring the immense appetite for investment in Saudi Arabia’s expanding food industry.
The IPO, which saw the offering of 24,549,600 shares constituting 30 per cent of the company’s issued share capital, concluded with resounding success.
The company now trades under the symbol ‘2284’, marking a significant milestone in its journey towards greater market accessibility and expansion.
The restructuring move comes at a time when demand for flour and feed products is steadily increasing, driven by the region’s growing population, rising food demand, and efforts to ensure food security.
Saudi Arabia, in particular, has been scaling up its food processing sector as part of its Vision 2030 initiative, which seeks to reduce dependence on imports and strengthen local production.
In recent years, several Saudi flour producers have taken similar steps to secure their financial footing and bolster their market positions, reflecting a broader trend in the region’s food industry.
The Murabaha structure, a Shariah-compliant financing method, offers Modern Mills a cost-effective and flexible option for managing its debt, while adhering to Islamic banking principles. Such moves are critical for the company’s ability to navigate economic uncertainties and maintain long-term financial health.
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