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Surely the stakeholders that are paid this dividend remain overwhelmingly Saudi (government) interests. So they made up this dividend to loot the place. I'm sur

Surely the stakeholders that are paid this dividend remain overwhelmingly Saudi (government) interests. So they made up this dividend to loot the place. I'm sure they had other ways of looting prior. What's the big difference?

munk-a 5y ago
From the article at least - the pre-agreed dividend (a thing I had no idea existed) is so onerous on the company that it can't keep up with payments. So the company is being forced to sell off long term investments and assets for a quick buck just to cover the dividend it's agreed to pay. It's like saying: "Hey, I've got an ice cream stand that I make 50$ of a week and has capital assets worth 200$. I wonder if I contractually agreed to donate 75$ worth of value every week - would that work well for me?"
- deleted 5y ago
  [deleted]
- draw_down 5y ago
  That’s just rehashing what’s in the article. GP is not asking why the dividend is bad for the company.
- fy20 5y ago
  I wonder if there is something else going on, as this sounds like an awfully good way to cover up a sinking ship, yet still take money out for the stakeholders. In 5 years time when the company is bankrupt they can just come out and say the IPO was a bad idea, while the main stakeholders are sitting nicely in their gold plated Lamborghini's [0]. [0] I made that up, but turns out it is actually a thing: https://m.economictimes.com/nation-world/strange-things-saudi-princes-spent-money-on/when-money-matters/slideshow/56999098.cms https://m.economictimes.com/nation-world/strange-things-saud...
LatteLazy 5y ago
I think generally the looting is done at the top and then drip fed down: a Prince loots 100m and keeps 20 and passed 80 down to lessor and lessor people. That maintains their loyalty to that Prince. In roughly the same people get a dividend direct from SA, they don't have to keep coming and asking their particular prince or supporting his other efforts etc. This seems like it cuts out a lot of the middle men and just leaves MBS and the recipient... Also, as in understand it, a lot of people were basically forced to buy shares whether they wanted to or not (or lose favour). A big dividend semi reverses that. It's like forcing someone to pay a big fine then, majestically giving half back to show you're a beneficent and merciful king.
random314 5y ago
I found the dividend situation confusing too. On Google finance the dividend yield is 4%. Afaik, only 10% of the stock is not being held by the saudi government. Assuming 2T market cap, the dividend obligation is 8B$ to shareholders. But the article indicates an order of magnitude higher dividend obligation. Are there dividend obligations above and beyond what's visible in Google finance?
- perl4ever 5y ago
  I believe a greater dividend has been promised than what is current, and the large figures are including the stock held by the government.
perl4ever 5y ago
People are like "oh, they're just paying it to themselves". Well, sure, they don't have to write down the dividend they pay to themselves, but that doesn't change the spending that presumably is allocated from the dividend. One motivation for formalizing things that you don't have to is that then you have better excuses for not doing certain things. While they made up the dividend, it wouldn't make "looting the place" more sustainable to get rid of it. Formalizing the "looting" does highlight its unsustainability and seems like a reasonable reason to write an article to me.

munk-a 5y ago

From the article at least - the pre-agreed dividend (a thing I had no idea existed) is so onerous on the company that it can't keep up with payments. So the company is being forced to sell off long term investments and assets for a quick buck just to cover the dividend it's agreed to pay. It's like saying: "Hey, I've got an ice cream stand that I make 50$ of a week and has capital assets worth 200$. I wonder if I contractually agreed to donate 75$ worth of value every week - would that work well for me?"

deleted 5y ago
[deleted]
draw_down 5y ago
That’s just rehashing what’s in the article. GP is not asking why the dividend is bad for the company.
fy20 5y ago
I wonder if there is something else going on, as this sounds like an awfully good way to cover up a sinking ship, yet still take money out for the stakeholders. In 5 years time when the company is bankrupt they can just come out and say the IPO was a bad idea, while the main stakeholders are sitting nicely in their gold plated Lamborghini's [0]. [0] I made that up, but turns out it is actually a thing: https://m.economictimes.com/nation-world/strange-things-saudi-princes-spent-money-on/when-money-matters/slideshow/56999098.cms https://m.economictimes.com/nation-world/strange-things-saud...

LatteLazy 5y ago

I think generally the looting is done at the top and then drip fed down: a Prince loots 100m and keeps 20 and passed 80 down to lessor and lessor people. That maintains their loyalty to that Prince. In roughly the same people get a dividend direct from SA, they don't have to keep coming and asking their particular prince or supporting his other efforts etc. This seems like it cuts out a lot of the middle men and just leaves MBS and the recipient... Also, as in understand it, a lot of people were basically forced to buy shares whether they wanted to or not (or lose favour). A big dividend semi reverses that. It's like forcing someone to pay a big fine then, majestically giving half back to show you're a beneficent and merciful king.

random314 5y ago

I found the dividend situation confusing too. On Google finance the dividend yield is 4%. Afaik, only 10% of the stock is not being held by the saudi government. Assuming 2T market cap, the dividend obligation is 8B$ to shareholders. But the article indicates an order of magnitude higher dividend obligation. Are there dividend obligations above and beyond what's visible in Google finance?

perl4ever 5y ago
I believe a greater dividend has been promised than what is current, and the large figures are including the stock held by the government.

perl4ever 5y ago

People are like "oh, they're just paying it to themselves". Well, sure, they don't have to write down the dividend they pay to themselves, but that doesn't change the spending that presumably is allocated from the dividend. One motivation for formalizing things that you don't have to is that then you have better excuses for not doing certain things. While they made up the dividend, it wouldn't make "looting the place" more sustainable to get rid of it. Formalizing the "looting" does highlight its unsustainability and seems like a reasonable reason to write an article to me.