Former Drake & Scull vice-chairman sells stake at Dubai contractor

The former Drake & Scull vice-chairman Khaldoun Tabari has sold his stake in the contractor Drake & Scull to the company pledging to put Dh500 million of new money into the business.

Mr Tabari is understood to have completed a transaction to sell his remaining stake in the Dubai-based contractor to Tabarak Investment on Thursday, making the firm the biggest single shareholder in the company. It is understood that he owned between 12 to 14 per cent of the company. Following its purchase, Tabarak Investment is believed to own about 18 to 20 per cent of Drake & Scull.

Drake & Scull is in the midst of a capital restructuring exercise that could see the company write down 75 per cent of its share capital, or about 1.7 billion shares, to extinguish prior losses. Following this reduction, the company will have 580 million shares, and Tabarak Investments is due to subscribe to 500 million new shares at a price of Dh1 per share, which would have given it a 47 per cent stake in the company. However, given recent share acquisitions Tabarak Investment will become the majority stakeholder, post-recapitilasation.

This capital restructuring was rejigged following the dismissal of an earlier plan to writedown 50 per cent of its capital, and to allow Tabarak Investment to subscribe to shares at a discounted rate of 43 fils per share, which was rejected by the regulator, the Securities and Commodities Authority. “From our perspective as the current management of Drake & Scull, and all of the staff, this is great news, the Drake & Scull chief executive Wael Allan told The National.

“Obviously, people are always going to speculate – ‘Is Tabarak coming in, is it not coming in?’ I think with this move, it is clear that they are absolutely committed. I am encouraging them to be more actively involved in the business and I will be talking to them about how we can increase their effective participation in the business.

Mr Allan said he expects to hear “at any moment” as to whether the regulator will approve its capital restructuring.

Once this is done, he said the Dh500m being committed by Tabarak Investment would be put to work to generate more cash.

“It’s important that the money is used wisely and used well,” Mr Allan said. He said it would be used for the accelerated execution of projects that are nearing completion, the recommencement of stalled projects and for business development purposes to secure new work.

“It’s not just about the money. As well, it’s their [Tabarak Investment] ability to help us with our banking issues and new bank lines, because they are more familiar with that area and a lot stronger than we are.”

Drake & Scull’s shares have been heavily traded over the past week, up more than 20 per cent over seven days to close at 43 fils per share on Sunday.

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