Dubai-based contractor Drake & Scull International swung to a loss in the first quarter of this year, as it liquidated bank guarantees and interest charges amid its ongoing restructuring process.
The contractor posted a Dh52.4 million ($14.2m) loss, compared to a Dh115.7m profit in the same period a year earlier, DSI said in a statement to the Dubai Financial Market.
It is now focusing on court approval to enact a restructuring plan after it secured the creditors' approval, said Shafiq Abdelhamid, chairman of DSI.
Drake & Scull faced mounting losses after a fall in oil prices in 2014 led to a decline in new projects and the company struggled to recoup receivables owed to it.
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 firm Tabarak Investment committing Dh500m for a strategic stake in the company.
“At the last hearing on April 20, 2022, the court decided to appoint an expert to review the procedure that has been made by the company to decide whether it complies with the restructuring requirements or not,” Mr Abdelhamid said.
“Once the court process is successfully completed, it will then allow the company to issue the Mandatory Convertible Sukuk, complete the Rights Issue to the existing shareholders and resume the trading of shares on the Dubai Financial Market.”
Last year, DSI filed a formal application with Dubai Courts, requesting that the company be restructured in accordance with UAE bankruptcy law emergency provisions.
DSI currently has an order backlog of Dh380m, driven by ongoing operations in the UAE and overseas.
The company reduced its general and administrative expenses by 19 per cent to Dh13m in the first quarter from the same period a year ago.
“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,” said Mr Abdelhamid.
“We will continue to make all possible efforts to ensure that DSI PJSC shares will resume trading on the DFM after the completion of the restructuring.”