Drake & Scull narrows loss in Q2 as it awaits court approval for debt restructuring

The company is expecting a review and decision on its restructuring procedure on September 5

Drake & Scull said in March that it had completed its restructuring plan after reaching settlements with a number of creditors. Rich-Joseph Facun / The National

Dubai-based contractor Drake & Scull International (DSI) narrowed its loss in the second quarter of 2022 as it awaits court approval for its debt restructuring process.

The company posted a loss of Dh36.6 million ($9.96m) in the three months ended June, compared with a Dh38m loss in the same period a year ago, it said in a filing to the Dubai Financial Market on Friday.

Revenue in the quarter declined 41 per cent annually to Dh21.17m as the company absorbed the impact of discontinued operations.

For the first half of 2022, DSI swung to a loss of Dh89m, compared with a profit of Dh77.3m in the same period a year ago. Revenue for the six-month period fell 45 per cent to Dh45m on an annual basis.

DSI's order backlog currently stands at Dh474m, driven by continuing operations in the UAE and overseas, it said.

The company's losses piled up after the fall in oil prices in 2014, which led to a decline in new projects. DSI struggled to recoup receivables owed to it.

“Further to our previous announcement on May 23, 2022, related to completing the restructuring process, we are currently focusing on obtaining the approval of the competent court to be able to implement the plan,” said chairman Shafiq Abdelhamid.

The latest financial restructuring is the second that DSI has undergone in the past five years.

In 2017, a capital restructuring took place that resulted in Dh1.7 billion worth of shares being cancelled to expunge historic losses, with private equity company Tabarak Investment committing Dh500m for a strategic stake in the company.

DSI said in March that it had officially completed its restructuring plan after reaching settlements with a number of creditors.

At the last hearing on April 20, the court appointed an expert to review DSI's restructuring procedure. The expert submitted a report confirming the company's ability to carry out the restructuring, the company said.

A review and decision are expected in the next court hearing on September 5. A successful completion of the restructuring process will enable DSI to resume trading on the DFM.

“We are grateful for the patience of our shareholders as we seek to restructure the company, thereby protecting, as far as possible, their investments and the livelihoods of many hundreds of families,” DSI said in Friday's filing, repeating Mr Abdelhamid's statement in its previous earnings report.

“We will continue to make all possible efforts to ensure that DSI shares will resume trading on the DFM after the completion of the restructuring.”