Arabtec Holding, the UAE's biggest listed construction company, will be placed into liquidation due to its "untenable financial situation," the company said on Thursday.
Shareholders voted to dissolve the company at a general assembly on September 30 after the board considered "a number of strategic alternatives", Arabtec said in an emailed statement.
“In recent years, limited liquidity in the construction sector has impacted the progress of Arabtec’s projects and this has been exacerbated by the effects of Covid-19," the company's chairman, Waleed Al Muhairi, said.
"Despite efforts to pursue legal and commercial entitlements and a restructuring of the company’s finances and operations, the situation in which Arabtec finds itself today is untenable."
The company will now be liquidated through a "controlled and efficient programme" to maximise value for stakeholders, he added.
"Over the coming weeks, the company’s board and management will work closely with regulators and stakeholders. Our current priority is to ensure that everyone directly affected by this decision, is treated fairly during this challenging time.”
Arabtec began trading in 1975 and grew to become a powerhouse of UAE construction, building many of the country's landmarks such as Dubai's Burj Khalifa and Abu Dhabi's Louvre Museum.
The company floated on the Dubai Financial Market in 2005. Its most recent annual report for its 2018 financial year show it had 45,000 employees, but it had recently been cutting costs as its losses continued to mount.
The shareholders vote follows Arabtec reporting a net loss of Dh794 million in the first half of this year.
As of June 30, the company owed about Dh1.8bn to banks and more than Dh5.3bn to trade creditors. It had total liabilities of Dh10.14bn and assets of Dh9.79bn, according to its half-year financial statement.
Arabtec's board now has a maximum of two months to hold discussions with all of its main stakeholders before a liquidation application is filed to the courts. The company said its primary objective is to provide stability for staff, subsidiaries, sub-contractors, suppliers, and other stakeholders.
In August, the company said it was planning to embark on a capital restructuring exercise with a view to strengthening its balance sheet.
In 2017, it raised Dh1.5bn through a rights issue from shareholders after cancelling Dh4.6bn worth of shares to wipe out historic losses.