Drake & Scull to resume trading of its shares on DFM after more than five years

Company increases its share capital by $82 million amid court-approved restructuring plan

Drake & Scull reported higher net losses last year compared to the previous year, despite a rise in revenue. Rich-Joseph Facun / The National

Dubai-based contractor Drake & Scull International plans to resume trading its shares on the Dubai Financial Market after the company increased its share capital by Dh300 million ($82 million).

This follows the acceptance of the Dubai Courts of its restructuring plan that writes off 90 per cent of its debt, it said in a statement on Wednesday.

The company will hold a general assembly meeting on March 27 to seek the approval of shareholders for the resumption of trading and the increase of its share capital.

If approved by shareholders, the shares of DSI will be traded on DFM for the first time in more than five years.

Drake & Scull fell on hard times during the three-year oil price slump that began in 2014 and heavily affected the property and construction sector in the region. Trading of its shares was suspended in November 2018 after the company reported heavy financial losses.

Last year, DSI announced it intended to write off 90 per cent of its debts and convert the remaining 10 per cent into mandatory convertible sukuk as part of a restructuring plan.

The company obtained approval from creditors who account for 67 per cent of the company's total debt value, exceeding the threshold needed for the restructuring plan under the UAE's Bankruptcy Law, DSI said at the time. It submitted a request to the court to approve the restructuring plan.

In 2022, DSI completed its restructuring plan after the company achieved the required voting percentage from its 600-plus creditors for a consensual agreement.

The financial restructuring is the second that DSI has undergone.

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 Dh500 million for a stake in the company.

In the third quarter of 2021, DSI also filed a formal application with Dubai Courts, requesting the company to be subject to restructuring procedures in accordance with the emergency provisions of UAE Bankruptcy Law.

DSI has also accused its previous management of falsely inflating asset prices ahead of the company's initial public offering.

“This progress wouldn’t have been achieved without the support of Dubai Financial Market, Securities and Commodities Authority and the different government entities, as well as the efforts of the board of directors along with the efforts of the company executives,” said Shafiq Abdelhamid, chairman of Drake & Scull.

He said the shareholders' strong participation in the meeting and for the subscription in the new additional share capital increase was “a key step to the success of the restructuring plan that enabled the writing off of 90 per cent of the company debt”.

The company reported higher net losses in 2023 compared to the previous year, despite a rise in revenue.

Its total net loss for the year reached Dh352.1 million compared to Dh224.3 million for the same period the previous year, according to its recent financial statement.

Revenue for the period rose about 16 per cent to Dh93.8 million. The company had Dh356 million worth of assets by the end of last year.

During the annual general meeting, Drake & Scull will also decide on other "strategic topics related to the company’s future plans and growth", it said on Wednesday.