Dubai: Dubai builder Arabtec, which underwent a major management shakeup last week, said it will rely on the reputation of its biggest shareholder and proceeds from a planned $1.8 billion capital raise to grow its business.
The assurances from its newly-appointed chief executive comes amid a plunge in its share price over worries of dilution and larger control for Abu Dhabi state investment fund Aabar, which already has a 22 per cent stake in the company.
Arabtec replaced its founder and Chief Executive Riad Kamal last week with Abu Dhabi-based private investor Hasan Abdullah Ismaik. It also revealed plans to raise $1.8 billion through a rights issue and convertible bond to finance growth.
Its shares plunged 9.8 per cent on Thursday, a day after the announcement. The drop continued on Sunday with shares of the builder falling another 9.7 per cent at 0645 GMT to a two-month low. “Arabtec intends to expand through organic growth, acquisitions and the formation of world class joint ventures,” Ismaik said in an email response to questions, denying any plans to delist.
“The reason why the board has chosen a rights issue to fund the new strategy is that it enables shareholders to participate in the company’s future growth.”
The rights issue was set on Wednesday at a near 50 per cent discount to the company’s then market price.
The comments are Ismaik’s first after taking charge of the company. Ismaik, a Jordanian businessman based in Abu Dhabi, is also chairman of German football club TSV 1860 Munchen.
Arabtec’s backlog, including 2013 contract awards, stands at nearly $22 billion. Ismaik said the firm has a clear visibility on its future earnings and it’s strategy is to grow the company’s operations in Saudi, Kuwait, Qatar, Oman and UAE.
Arabtec said last week that 2012 net profit fell to Dh139.2 million ($37.90 million)from Dh221.1 million a year ago.
The new chief also said Aabar has not sought to increase its 22 per cent stake.
“Aabar’s stake is supportive to Arabtec but they have not applied for an increase of their stake,” Ismaik said in comments to Abu Dhabi TV, which were quoted on state news agency WAM.
Aabar, which owns stakes in companies such as commodities trader Glencore and Italian bank UniCredit, has been exerting its influence on Arabtec since it started buying shares last year.
Ismaik was also quoted saying Arabtec wants to preserve its liquidity and does not want to borrow more and increase its debt.
The firm had said it has agreed with Dubai’s Meydan to reach an out-of-court settlement for all outstanding claims, after four years of a legal dispute.
“Arabtec is looking to agree the settlement that is due to them. The discussions have only just started,” said Ismaik.
Malaysian engineering firm WCT and Arabtec won a $1.3 billion joint venture contract to build a racecourse for Meydan in 2008.
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