Arabtec gains regulatory approval for capital restructuring plan

Arabtec Holding’s chairman Mohamed Al Rumaithi has said that its proposed recapitalisation programme “will provide the foundation for building a successful and sustainable future for the group”.

The company has gained approval in principle from regulators for the recapitalisation, which will see it undertake its second rights issue in four years, tapping shareholders for a further Dh1.5 billion in a bid to wipe out losses accumulated over the last two years, including a Dh3.5bn net loss in 2016 alone.

In a statement to the Dubai Financial Market on Wednesday, the contractor said that it has not yet set an offer price for the latest rights issue, which would initially increase the size of its capital base from Dh4.6bn to Dh6.1bn.

Arabtec’s shares rose 7.9 per cent in late morning trading to 90.6 fils.

However, following the fund-raising, it intends to then cancel 4.5bn worth of shares in a bid to wipe out accumulated losses of Dh4.6bn. Shares will be cancelled on a pro-rata basis.

Arabtec said that it expects to finalise the terms of this recapitalisation by the end of March, when it also plans to release its fully audited accounts for 2016.

The company confirmed that all shareholders are being invited to take part in the rights issue, but that principal shareholder Aabar Investments, which currently holds a 36.11 per cent stake, has agreed to take up its full entitlement and would also pick up additional shares should current shareholders opt not to take part in the issue.

Mr Al Rumaithi said: “The full commitment of our largest shareholder, Aabar Investments, to the recapitalisation programme represents a huge vote of confidence in the board and in the continuing strength of our business.”

The Dh1.5bn capital raising is its second in four years.

In 2013, former chief executive Hasan Ismaik doubled the then size of its share base by raising Dh1.6bn as part of an expansionary push into new areas that was meant to see it concentrate on higher-margin work in oil and gas and related disciplines like MEP contracting and facilities management.

This plan was abandoned following his departure in 2014, and the company began a series of restructurings under different personnel. During this time, it has posted eight successive quarterly losses. In June last year, the company also announced that it was using Dh1bn of company reserves in a bid to reduce earlier losses.

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