Dubai contractor Drake & Scull expects to win creditor approval for ambitious plan
Once approved, it will proceed with rights issue and focus only on core MEP operations
Dubai: Selling of loss-making entities and a return to focus on its core MEP-related project work is helping with Drake & Scull’s revival, according to a top official. The company, in the midst of a major financial restructuring, is also pursuing new work – in the UAE and outside.
“We are making a continuous effort to win more projects were possible, whether in UAE or overseas, in addition to the on-going operations in Algeria, Tunisia, Palestine, India, Kuwait, Iraq, and Germany,” said Munir Mansour, CEO.
“The organizational restructuring is progressing well especially after the sale of a number of the loss-making civil-related entities.” Its current order backlog is valued at Dh398 million.
Last year, it recorded a one-off gain of Dh291 million from selling a subsidiary company. Total negative equity was reduced from Dh3.97 billion in 2019 to Dh3.90 billion. (Drake & Scull's issues came to light in 2019, when the company revealed that its actual losses were much bigger than stated in its previous year financials. It launched investigations into former executives' decisions and actions. These are still progressing at multiple levels.)
Turnaround point
On the five-year restructuring plan, Drake & Scull, which had accumulated losses of Dh4 billion plus as well as debts to pay off, is making some headway.
• An agreement in principle was reached with a group of the largest lenders in January.
• This was later presented to all creditors and will be the “basis upon which they hopefully approve the overall restructuring,” the company said.
• The detailed documents are being finalised for the formal approval of the majority of the creditors.
• When approved, with the support of the Financial Restructuring Committee, “we then look to the Courts to approve the implementation of the restructuring plan. Once approved by the Court It will then be for the shareholders to approve the deal and the launch of the associated rights issue.”
For 2020, the company had revenues of Dh182 million compared to AED 681 million in 2019, while gross profit was Dh17 million against Dh8 million in 2019. The net profit was boosted by selling off the subsidiary, and totalled Dh95 million and a marked change from net losses of Dh87 million in 2019.
Reduction of General & administrative expenses to Dh69 million compared to 2019's Dh252 million was "one of the main reasons contributing to the net profit," the company added.