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Abu Dhabi, UAEMonday 17 December 2018

Drake & Scull shares jump after shareholders approve continuing operations

Dubai-based contractor says there will further restructuring

The company, which has faced mounting losses since 2015, called the general assembly meeting in accordance with an article of UAE companies law. Rich-Joseph Facun / The National
The company, which has faced mounting losses since 2015, called the general assembly meeting in accordance with an article of UAE companies law. Rich-Joseph Facun / The National

Drake & Scull International's shares jumped after the Dubai contractor said a majority of shareholders voted for continuing the company's operations during a general assembly last week.

The board informed shareholders about the company's future plans and the developments in the investigation into the previous executive management by the current management, DSI said in a statement to the Dubai Financial Market on Sunday, without providing details. DSI shares rose 2.9 per cent to Dh0.44 at market close.

"The shareholders of the company were informed by the board of directors on the current situation of the company," DSI said in the bourse filing.

The company, which has faced mounting losses since 2015, called the general assembly meeting in accordance with an article of UAE companies law. Article 302 of the company law requires firms to vote on whether to continue operating once their losses reach half of their share capital.

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Tabarak raises stake in Drake and Scull to 13.73%

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Ahead of the meeting, private equity company Tabarak Investment increased its shareholding in DSI to 13.73 per cent from 13.26 per cent.

DSI, which reported a second-quarter loss of Dh181 million compared to a Dh183m loss a year earlier, has been hit by a slump in the region’s construction industry in the past few years along with many contractors whose payments were delayed as oil prices fell to a three-year low.

The company, which last year announced a turnaround plan, will see "further restructuring," Feras Kalthoum, chief restructuring officer at Drake & Scull, told The National, without providing details.

After voting to keep the company in business, the biggest priorities facing Drake & Scull are assessing the profitability of their projects and fund-raising, Nabil Al Rantisi, managing director at Daman Investments, said.

"They have to look at the pipeline of the business and see how profitable it is and second, they have to raise money through debt or equity," Mr Al Rantisi said. "They may consider raising debt that's convertible to equity."

In July, the company said its former management was involved in “material” financial violations that are under investigation by UAE authorities. Former chief executive Khaldoun Al Tabari has denied allegations of financial misconduct.