7 ms·

What would stop Saudi Aramco from stopping all dividends and unilaterally write off its own debt?

eyelovewe 5y ago
Cultural values that would mean MBS and the House of Saud loses face and honor. (And future access to money)
munk-a 5y ago
I am curious about that as well since the article mentions > The most desperate of these was the pledge to guarantee a dividend payment to shareholders in Aramco of US$18.75 billion every single quarter of every single year – a total of US$75 billion every single year. I've never heard of a contractually binding agreement to drive yourself into bankruptcy via an overly generous dividend. From this FT article[1] it does sound like it's pretty voluntary though > Mr Nasser told reporters that “our intention is to pay $75bn, subject to board approval and depending on market conditions”. Minority shareholders, who own 1.5 per cent of the company, will be “protected” for the next five years and given priority payments, he said. 1. https://www.ft.com/content/3c2c576c-51c6-4ced-b1c2-586c4b2f4914 https://www.ft.com/content/3c2c576c-51c6-4ced-b1c2-586c4b2f4...
JumpCrisscross 5y ago
> What would stop Saudi Aramco from stopping all dividends and unilaterally write off its own debt? Nothing. Argentina defaults on its debt every Christmas, and its bonds still get bought. Aramco’s are a non-sovereign corporate’s equity dividends, where most of the shares are owned by the Saudi government and royal family.
- gruez 5y ago
  >Nothing. Argentina defaults on its debt every Christmas, and its bonds still get bought wtf? Every christmas every year?
  - 55555 5y ago
    "Merry Christmas, investors! The best gifts come in tiny, tiny boxes..." Why Christmas? That just seems mean.
    - NullPrefix 5y ago
      Being mean depends on which side of the equation you stand. Debt write off could be seen as a gift to the country.
      - imtringued 5y ago
        Only if you have no other options.

Cultural values that would mean MBS and the House of Saud loses face and honor. (And future access to money)

I am curious about that as well since the article mentions > The most desperate of these was the pledge to guarantee a dividend payment to shareholders in Aramco of US$18.75 billion every single quarter of every single year – a total of US$75 billion every single year. I've never heard of a contractually binding agreement to drive yourself into bankruptcy via an overly generous dividend. From this FT article[1] it does sound like it's pretty voluntary though > Mr Nasser told reporters that “our intention is to pay $75bn, subject to board approval and depending on market conditions”. Minority shareholders, who own 1.5 per cent of the company, will be “protected” for the next five years and given priority payments, he said. 1. https://www.ft.com/content/3c2c576c-51c6-4ced-b1c2-586c4b2f4914 https://www.ft.com/content/3c2c576c-51c6-4ced-b1c2-586c4b2f4...

JumpCrisscross 5y ago

> What would stop Saudi Aramco from stopping all dividends and unilaterally write off its own debt? Nothing. Argentina defaults on its debt every Christmas, and its bonds still get bought. Aramco’s are a non-sovereign corporate’s equity dividends, where most of the shares are owned by the Saudi government and royal family.

gruez 5y ago
>Nothing. Argentina defaults on its debt every Christmas, and its bonds still get bought wtf? Every christmas every year?
- 55555 5y ago
  "Merry Christmas, investors! The best gifts come in tiny, tiny boxes..." Why Christmas? That just seems mean.
  - NullPrefix 5y ago
    Being mean depends on which side of the equation you stand. Debt write off could be seen as a gift to the country.
    - imtringued 5y ago
      Only if you have no other options.