Breaking News: Shares in Arabtec jumped after company announced plans to shelved plans for a rights issue.
UAE's Arabtec shelves plans for $150m bond issue amid market conditions
Shares in Arabtec, the UAE's largest construction company, jumped 7 per cent in morning trading after the company said it would shelves plans to raise funds through a rights issue.
The company announced a net profit of Dh307 million for the last year, a 38 per cent decline from 2009. But investors were clearly relieved the company would not follow through on the rights issue, which would have offered 398 million shares to existing shareholders at Dh1 a share.
The company also said it would table plans to issue $150 million (Dh550mn) in bonds until "the market conditions become more favorable."
"The fact that they are putting off the capital issue is a positive," said Majed Azzam, an analyst with Alembic HC Securities.
The company's decision indicates raising capital is not "immediately urgent and the company is still in good shape," Mr Azzam said.
In a statement posted on the Dubai Financial Market today the company also announced plans to issue existing shareholders a bonus of one share for each four shares already owned.
Arabtec said revenue for the year was Dh5.4 bn, missing the consensus analysts' forecast of Dh5.68 bn.
Arabtec shares initially fell 3.8 per cent on Jan. 10 when the company announced plans for the rights issue and the bond sale.
Market conditions are not good for a Middle East construction company to raise funds, analysts say.
"The appetite is not there" for the bond issue, Mr Azzam said. "The bond market is very difficult right now."