Drake & Scull wins approval for key restructuring plan

29/05/2017 11:22 AST

Drake & Scull International (DSI), a regional engineering and services leader, said it has won approval from shareholders on the proposed capital restructuring programme which will see the company pursue a two-pronged strategy with additional capital reduction in the first phase and endorsement of Dh500 million ($136 million) capital increase in the second phase.

The company obtained shareholders’ approval for the restructuring programme at the annual general assembly meeting held recently.

Phase One of the programme, which includes the share capital reduction, is expected to be completed in the second quarter of 2017, stated the Dubai builder.

Drake & Scull pointed out that the 75 per cent share capital reduction will enable the company to extinguish its total accumulated losses attributed to the owners of the parent firm amounting to Dh1.71 billion ($462 million).

The reduction is imperative to the continuity of the business and will allow the company to eliminate the financial constraints that hinder the operating performance of the group and impact the ability of the company to secure new work.

Unveiling the new strategy, the top Dubai builder said the completion of Phase One (Capital reduction) of the capital restructuring program will enable the company to successfully execute Phase Two (Dh500 million capital increase); a critical and strategic endeavour that is equally important and essential to resolve the liquidity challenges of the company.

Upon Emirates Securities and Commodities Authority's (SCA) approval, the proposed capital reduction through the cancellation of 1,714 million shares will be on a pro-rata basis and will apply to all DSI shareholders.

The capital hike plan will be implemented once the SCA gives approval to Phase One, said a top official.

"We are confident that the completion of the capital restructuring program will enable us to stabilise the business and help to resolve our financial challenges," remarked CEO Wael Allan.

“We are undertaking several strategic measures to improve our operations, control costs and eliminate inefficiencies affecting our business across all operating segments. We will continue to focus on our core competencies in the UAE market in the MEP sector and we expect to resolve our legacy issues in 2017 to set a solid foundation for recovery and sustainable growth," he added.

Drake & Scull said it expects to complete the capital restructuring program in the first half and is concurrently implementing several strategic measures to improve the operational performance of the group in core markets in the MEP sector.

During the first quarter, the group progressed successfully with its divestment program and disposed of a major non-core asset to generate immediate cash for the business.

The divestment program is set to continue throughout the fiscal year and will further contribute to resolving the liquidity challenges of the group, it added.

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