Arabtec Holding, the country’s largest-listed construction company, has agreed a Dh400 million debt facility to be provided by its largest shareholder.
Arabtec said that the loan would be provided by Aabar, the investment fund controlled by the Abu Dhabi government.
Arabtec, which has been hit hard by the slowdown in the UAE construction industry caused by a fall in global oil prices and the strong US dollar, said that the funds would be used to deliver current projects.
“With the challenging conditions continuing in the regional construction market, this facility will provide Arabtec with additional funding to be directly deployed towards delivering our ongoing and newly awarded projects in a timely manner,” said Saeed Mohamed Al Mehairbi, the acting chief executive.
Earlier this year, Arabtec approved a move to use Dh1 billion of reserves to writedown losses of Dh2.27bn accumulated over six successive quarters.
The losses meant it was close to breaching a market rule that states companies are not allowed to accrue losses amounting to more than 50 per cent of their share capital. Arabtec’s share capital stood at Dh4.6bn at the end of the first quarter.
The move also comes after the Abu Dhabi government announced it planned to merge International Petroleum Investment Company (Ipic), the parent of Aabar, with fellow Abu Dhabi fund Mubadala Development.
“This loan doesn’t change the narrative regarding Arabtec,” said Sanyalak Manibhandu, the head of research at NBAD Securities. “Arabtec is still suffering from the fact that some of its clients are not paying and in 2016 contractors are having a hard time. However, it does seem to show that the Abu Dhabi government is prepared to support its own companies in strategically important industries such as construction.”
lbarnard@thenational.ae
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