Dubai-based contractor Drake & Scull International has written off AED 4.18B ($1.1B) in financial and commercial debts and has started settling with other creditors after completing its restructuring requirements.
The company, which resumed trading on the Dubai Financial Market last month after a hiatus of over five years, will now be able to enter tenders and secure new projects, it announced in a bourse statement.
As part of the process, Drake & Scull will issue sukuk to creditors with debts equal to or exceeding AED 1M, with these bonds convertible to shares five years after issuance.
The company has also begun offering cash settlements for creditors with debts under AED 1M, with a total of AED 13.6M to be paid, according to the final list of creditors published on January 30.
The debt write-off will be reflected in the company’s financial statements in the second quarter of this year.
Court Approves Restructuring Plan, Opening New Opportunities for Drake & Scull
“This is a significant achievement that opens new opportunities for the company to expand its operations both domestically and internationally by entering new bids, thereby enhancing profitability, assets, and shareholders’ equity,” it said.
The court’s approval of the restructuring plan and its implementation “has halted all judgments and lawsuits filed by financial and commercial creditors against the company, which are subject to the restructuring process,” it added.
The company’s shares were trading up 7.84 per cent at AED 0.385 per share at 12:39 pm on Monday.
Drake & Scull’s return to the DFM follows prolonged debt negotiations with its lenders and trade creditors, numerous court cases, a complete managerial overhaul, and two complex capital restructurings over the past decade.
The contractor faced difficulties during the three-year oil price slump starting in 2014, which severely impacted the property and construction sector in the region.
Trading of its shares was suspended in November 2018 after the company reported substantial financial losses.
Drake & Scull’s Restructuring Plan Shows Promise with Improved Financial Outlook
In 2022, Drake & Scull completed its restructuring plan after securing the required voting percentage from its 600-plus creditors for a consensual agreement.
Its net loss last year was AED 352.1M, compared to AED 224.3M in the same period the previous year, according to its recent financial statement.
Last month, the company reported accumulated losses of AED 5.5B as of March 31. It anticipates the benefits of restructuring to become evident in the second quarter of this year, leading to an overall equity improvement of about AED 4.6B.
Drake & Scull, which raised more than AED 450M in new capital this year, is also pursuing various claims in the market that it aims to collect through direct settlements or court litigation.
Recently, Drake & Scull Engineering, one of its subsidiaries, won a court judgment from the Court of Appeal, which ordered a company in Dubai to pay AED 36.7M plus fees, interest, and expenses.
“The company has begun taking the necessary measures to execute the award, noting that this amount includes bank guarantees,” Drake & Scull said.
