Former Drake & Scull chief sells most of Depa stake

The Dubai-based fit-out company Depa has revealed that the former Drake & Scull chief executive Khaldoun Tabari has reduced his holding in the business following a recent spell of buying shares in the company.

In a disclosure to Nasdaq Dubai, the company said Mr Tabari bought 163,000 shares at a price of US$0.358 per share last Thursday, which brought his total stake in the business up to 3.59 per cent.

However, he then subsequently sold most of his holding in the company, divesting more than 21 million shares on the same day at a price of $0.359. This reduced his ownership in the business to just 0.12 per cent and earned him more than $7.5 million.

Mr Tabari had once owned 6.11 per cent of Depa, having bought out the former Arabtec founder Riad Kamal’s stake for more than $25m in January 2014. At the time, the company’s shares were trading at $0.67 per share.

But Depa published a notification to the stock market last November in which it announced that Mr Tabari had transferred this stake back in December 2014 to a trust called Clarity Fund SPC, which was holding the shares for a trustee company based in the British Virgin Islands. It said the transaction was recorded “as a contribution by Mr Tabari to the trust”. The trust already owned shares in the company, and this deal took its holding to 7.72 per cent of Depa.

Mr Tabari then began rebuilding his stake in March, buying a 0.122 per cent stake at $0.309 per share. He has carried out several other transactions since, buying four other tranches in March and April at prices ranging from $0.30 to $0.31 per share.

The company’s shares have since appreciated as it has published a trading update and first-quarter results which both indicated that the turnaround strategy embarked upon last year by the chief executive Hamish Tyrwhitt has been delivering improved results. In May, it said net profit after non-controlling interests increased by 170 per cent to Dh23.5m as revenue increased by 15 per cent to Dh369.5m. It also said that it had continued to resolve legacy receivables issues, which helped to improve its cash collection (up 128 per cent to Dh342.9m).

Mr Tyrwhitt said the company had “made material progress” in bringing in cash from outstanding debtors, in the first quarter, and that it expected this to continue during the second .

"Resolving these issues materially de-risks Depa Group's balance sheet, enabling us to accelerate our plans to grow the business,” he said.

The sale of Mr Tabari's stake in Depa follows on from his divestment last month in Drake & Scull – the company that he bought a majority stake in back in 1998 then later brought to the Dubai Financial Market and ran for years until he resigned  last October as its financial troubles worsened.

Mr Tabari sold his stake in the company to Tabarak Investment – a DIFC-registered business which has proposed to inject Dh500m of new capital into the business after a major share recapitalisation, which will involve three-quarters of the firm's shares being cancelled to help it extinguish Dh1.7 billion worth of losses.