Saudi Cable Co. (SCC) provided a clarification about the Turkish appeal court’s recent decision that reversed the earlier bankruptcy ruling against Elimsan, its subsidiary in Turkey.
In its statement to Tadawul, the company mentioned that on Oct. 11, 2021, the board resolved to undertake necessary measures to safeguard Elimsan Salt Cihazlari ve Elektromekanik San ve Tic A.S. by invoking the debt protection law for financial restructuring.
Elimsan is under the ownership of Mas Kablo, another subsidiary, holding 94% ownership, which is entirely owned by Saudi Cable.
On Feb. 7, 2022, a debt protection (financial restructuring) request was filed with the court. The following day, Feb. 8, 2022, a temporary financial restructuring directive was issued for three months. This order was subsequently prolonged by two additional months on June 8, 2022.
Nonetheless, the court terminated the financial restructuring on July 6, 2022, citing that the company no longer required legal safeguarding. The court asked for a plan for operational restart, which was not provided by the company. Consequently, an appeal was lodged against the termination of the financial restructuring decision on Aug. 9, 2022.
Elimsan filed an appeal on Aug. 9, 2022. The appeal court, on Nov. 24, 2022, overturned the initial court decision, reinstating the financial restructuring for one year. However, on Oct. 4, 2023, the court annulled the appeal ruling. Following this, on Nov. 15, 2023, a petition was made to the Supreme Court of Appeals against this annulment.
On June 5, 2024, the court declared Elimsan bankrupt, ordering its liquidation. A response followed on July 22, 2024, where a petition was filed to the Supreme Court of Appeals contesting the bankruptcy declaration.
The company received communication from its lawyer on Dec. 14, 2024, concerning the Turkish Court of Appeals’ decision on Nov. 20, 2024, which overturned the earlier bankruptcy decision passed by the First Kocaeli Commercial Court regarding Elimsan.
Due to this decision, no further actions will be pursued against Elimsan by creditors, nullifying the bankruptcy ruling. The responsibilities of the bankruptcy administrator have concluded, with management duties returning to the board of directors and executives. The oversight of the bankruptcy administrator has ended, reinstating the company’s managers’ power to represent the company.
Furthermore, Saudi Cable elaborated, based on board decision No. 01/2024 dated March 3, 2024, regarding the divestment from Turkish investments announced on Tadawul on March 5, 2024, that provisions covering the total investment value in Turkey have been allocated.
Consequently, the investment value is now recorded as zero in the company’s financial records, resulting in no significant financial impact currently, nor does it meet disclosure requirements.
The company noted no financial impact, either positive or negative, resulting from the June 5, 2024 liquidation ruling, as the investment had previously been valued at zero in the parent company’s books and the audited consolidated financial statements.
However, the Turkish Court of Appeals’ decision on Nov. 20, 2024, to nullify the liquidation decision significantly restores management’s control over the company’s assets, which will have a considerable financial effect, though the specific amount is still undetermined.
