Bankrupt construction giant Arabtec's engineering services business put up for sale
It was Jan. 2021 one of Gulf's biggest contractors filed for bankruptcy after heavy losses
Dubai: The unwinding of the UAE construction giant Arabtec has started, with one of its subsidiaries – Arabtec Engineering Services – put up for sale. The process is being overseen by Dubai Courts’ Ninth Commercial Circuit – Bankruptcy Procedures division.
Up to 80 per cent of Arabtec Engineering Services will be offered, for a ‘minimum’ Dh49.6 million. The remaining 20 per cent will be retained by Zuzu Investments Ltd., according to a newspaper ad.
Submissions of interest need to be provided to the trustee of the Bankruptcy Procedures’ Case with five working days of the ad appearing. Arabtec Engineering Services provides micro-tunneling, road contracting and service lines, sewerage networks and lifting works.
It was in early January 2021 that Arabtec Holding entered bankruptcy proceedings after all efforts to pump in fresh capital or take in new investors failed to materialise. Arabtec at one time was one of the biggest contractors in the Gulf, having been associated with landmarks such as the Burj Khalifa and the Louvre in Abu Dhabi.
Losses in billions
At the time of entering bankruptcy, Arabtec was weighed under mounting losses running into billions, which came about in a tightening market for projects. The pandemic impact of 2020 put a further dent into new projects during the year. Arabtec also had major exposures to creditors, and when new funds to shore up the company could not be found, entering voluntary liquidation was the only solution.
Arabtec had multiple subsidiaries, with some of them taking on project work outside of the UAE. Selling some of the core units would thus be an integral part of the bankruptcy procedures, and that’s exactly what’s being done with Arabtec Engineering Services.
Some of the recent contracts Arabtec Holding had won have since moved on to new contractors.
A letter of support from bank, shareholder or related entity of the bidder confirming indicative support to the bidder to fund the stake purchase.
Pick up on projects
With property demand running hot, developers in Dubai are back at offplan launches, and which translates into higher project activity. The next four months is likely to see more tenders flowing through, much of which will be for property development.