Drake & Scull board approves the formation of a restructuring committee
Dubai contractor to form four-person committee after shareholders vote to continue operations
Loss-making Dubai contractor Drake & Scull International said on Tuesday its board approved forming a restructuring committee after majority of its shareholders voted to continue operations.
The four-person committee is comprised of company board members including group chief executive Yousef Al Mulla and Gulf Navigation chief executive Khamis Buamim, DSI said in a statement to the Dubai Financial Market, where its shares are traded. The decision to form the committee came during a board meeting on Monday.
The board discussed "proposals submitted by the financial and legal advisers and the board referred them to the restructuring committee for approval," DSI said. A company spokesman said no further details were available on the elements of the restructure plan, or when the committee would start its work.
Cash-strapped DSI, which last year announced a turnaround plan, said it would embark on "further restructuring" after shareholders decided this month to keep the company operating. The Dubai builder, along with its regional peers, has been hit by tough operating conditions as a three-year slump in oil prices meant contractors' payments were delayed.
DSI, which has faced mounting losses since 2015, called a general assembly meeting earlier this month in accordance with an article of UAE companies law. Article 302 of the law requires companies to vote on whether to continue operating once their losses reach half of their share capital.
Analysts said that after voting to keep the company in business, the biggest priorities facing DSI are assessing the profitability of their projects and fundraising.
Private equity operator Tabarak Investment in September increased its shareholding in the company to 13.73 per cent from 13.26 per cent, despite a drop in the DSI's shares.
The company, which reported a second-quarter loss of Dh181 million compared to a loss of Dh183m a year earlier, has yet to post third-quarter results.
Shares of DSI closed down 1.5 per cent to Dh0.403
Updated: October 23, 2018 08:29 PM