Etihad Etisalat Removes CEO as Errors Sink Market Value

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Etihad Etisalat Co., the Saudi Arabian phone company that’s lost about $9 billion of its market value since accounting errors were discovered four months ago, said its chief executive officer has been ousted.

Khalid Omar Al Kaf’s removal was effective Feb. 24, the Riyadh-based phone operator known as Mobily said in a statement on Wednesday. The company reserves its “rights to revert against him,” it said, without giving more information. The executive had submitted his resignation on Feb. 21, the company said.

Al Kaf said he was reviewing options with his legal team and declined to comment further when reached on his mobile phone on Wednesday.

Al Kaf had been suspended since November as the company’s audit committee investigated the errors, which prompted Saudi Arabia’s market regulator to start a probe to determine if Mobily violated rules. Deputy CEO Serkan Okandan had been in charge since Al Kaf’s suspension. The company said on Tuesday that it appointed Suliman bin Abdulrahman Al-Gwaiz as chairman after Abdulaziz Saleh Al Saghyir resigned for “health reasons.”

The market regulator suspended the shares on Wednesday as it sought an explanation from the company for a discrepancy in its 2014 results. Mobily said on Wednesday that it posted a loss of 913 million riyals ($243 million) after reporting a preliminary profit of 220 million riyals on Jan. 21. The company also said it won’t pay a dividend for the fourth quarter.

Auditor’s Report

An external auditor’s report says that the company’s debt conditions indicate that its ability to meet “obligations as they become due and to continue as a going concern depends on its ability to obtain a reset of the relevant covenant from the lenders,” Mobily said in a statement posted on the Saudi stock exchange website.

Management is currently talking with lenders to obtain “a reset of the relevant covenant and are confident that negotiations will be successful,” according to the statement.

Mobily’s market value had declined to 27.1 billion riyals in Riyadh on Tuesday from 61.6 billion riyals on October 30. The stock fell 20 percent this year to close at 35.21 riyals on Tuesday.