Pacific Controls in bank talks about Dh1.4bn debt

A turnaround and restructuring committee has been formed to oversee the affairs of Pacific Controls Group, the company said in a statement.

Pacific Controls, a Dubai-based technology company, is in talks with banks about restructuring debts of Dh1.4 billion, sources told Reuters.

It is also set to be the highest-profile example to date of a company receiving assistance from a special mechanism set up by the United Arab Emirates’ banking federation to help firms struggling to repay debt, the sources said.

Launched in 2000, the privately owned company benefited from the boom in the UAE’s economy as it provided technology services to local businesses, more recently expanding into cloud computing and the internet of things.

Gulf economies have cooled since lower oil prices began to squeeze revenues in 2014, with governments cutting spending and delaying projects.

Pacific Controls’ clients include a number of state institutions, such as Dubai Civil Defence and the Roads and Transport Authority, government controlled companies including telecoms firm Etisalat, as well as banks, hospitals and schools, its website showed.

It also has clients outside the UAE, such as Saudi Arabian telco Etihad Etisalat and King Abdullah University of Science & Technology.

It has encountered difficulties in part because of delayed payments from some of its clients, the sources said, declining to specify which owed money or how much the firm is owed.

Pacific Controls has not made payments on short-term bilateral loans for working capital, sources said. But payments related to a Dh1bn longer-term facility had mostly been met, although the principal on a June repayment was only 80 per cent covered, one of the sources added.

Many businesses have found it hard to repay hefty debts after the slowdown hit their balance sheets, although so far this has mostly been among small- and medium-sized enterprises and companies with debt issues lingering from the emirate’s 2009-10 financial crisis.

“Pacific Control Systems group has been in the midst of an organisational restructuring exercise. The comprehensive exercise will help streamline the operations of the company,” the company said in a statement on Wednesday.

“A turnaround and restructuring committee has been formed to oversee the affairs of Pacific Controls Group. Representatives from banks and the shareholders of Pacific Controls are part of this committee.”

“The management of Pacific Controls is confident of a turnaround on account of Pacific Controls’ intrinsic technology innovation, investment in infrastructure and sincerity towards the purpose of the group and its operations,” the company added.

Given the importance of Pacific Controls to the local economy, the sources said that it was in no danger of collapsing and a solution would be reached.

One of the sources said the company had used short-term loans to fund long-term capital expenditure projects. With revenue yet to accrue from these schemes, its cashflow position was then compounded by disruption from delayed payments.

The UAE Banks Federation declined to comment. The Dubai Media Office did not immediately respond to a request for comment.

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