Arabtec, the largest construction company in the country, is clawing its way back with major contracts in the region.
Despite smarting from slow payments and project cancellations in the Emirates, the company announced yesterday it had won a US$245 million contract to build part of a university in Kuwait. It will work along with Kuwait's Combined Group Contract Company to complete 60 per cent of the Sabah Al Salem University over the next three and a half years. The news comes after Arabtec won a combined total of Dh356m worth of contracts last month to build an underground car park in Abu Dhabi and villas in Egypt.
But the fate of the contract in Egypt is hanging in the balance as political and social upheaval batters the country.
Meanwhile, Arabtec is struggling to secure payment from some of its biggest clients in Dubai and was hit last month by a protest by 3,000 of its labourers. They were demanding a wage increase, which they eventually won, according to Dr Mohammed Abu Zafar, the Bangladeshi consul general in Dubai. Many of the company's labourers are Bangladeshi.
Another fear weighing on investors is a planned rights issue of 398.67 million Arabtec shares at Dh1 a share and the sale of $150m of five-year convertible bonds. These new financing mechanisms are expected to dilute current shareholders' equity.
Yet investors appear to be attracted to the company's long-term prospects. Arabtec has risen more than 6 per cent in the past five days of trading, closing up 0.5 per cent yesterday at Dh1.74.
What is clear is that Arabtec is now dependent on the major infrastructure and public-sector projects rising around the region.
Qatar is about to embark on $20 billion of spending in preparation for hosting the 2022 Fifa World Cup, and other Gulf states are shifting towards building schools, hospitals and public housing as the property downturn continues to weigh on their economies.