Dubai: Drake & Scull International (DSI) shareholders convened on Monday to approve multiple board resolutions concerning the company’s future, including the financial restructuring plan and capital increase up to Dh600 million, to become about Dh3.470 billion, by issuing 2.4 billion shares at 0.25 dirhams per share.
The Dubai-based contractor got the go ahead to resume trading its shares on the Dubai Financial Market (DFM) after the company increased its share capital by Dh300 million ($82 million), while writing off 90 per cent of the financial and trade creditors’ dues and issuing a mandatory convertible Sukuk that will be converted into shares after five years against the remaining 10 per cent.
Last month, DSI got approval from the DFM to reinstate the company’s shares. This follows the pre requisite step of 90 per cent of its debt being written off, and increasing the company share capital by no less than Dh300 million at 25fils per share, as per the court-approved restructuring plan.
Drake & Scull's restructuring strategy aims to rebuild confidence in the company by focusing on its core strengths, such as: mechanical and electrical works (MEP), as well as the high potential water and environment operations “Passavant”, and Oil and Gas sector.
The restructuring plan will be applicable on 4 entities, as approved by the courts and will include:
- Drake & Scull International PJSC
- Drake & Scull International LLC
- Drake & Scull Engineering LLC
- Drake & Scull for Contracting Oil & Gas Fields Facilities LLC
Creditors, including both financial and trade creditors, agreed to a 90 per cent write-off of their claims. The remaining 10 per cent balance of creditors whose total claims exceed Dh1 million will be exchanged by a Mandatory Convertible Sukuk (MCS). Creditors whose balance is between Dh50,000 and Dh1 million will have the option to receive cash or MCS, while creditors with a balance of less than Dh50,000 will receive 10 per cent of their balance in cash.
Mandatory Convertible Sukuk
The Sukuk will be issued for a period of 5 years and will be converted into Drake & Scull shares at maturity or earlier date, in case of certain early conversion events, as stipulated in the restructuring plan. The MCS will not be eligible for a fixed profit rate but will be entitled a share of any dividends distribution paid by the company.
At maturity, the MCS will receive 35 per cent of the issued capital of Drake & Scull, subject to some adjustments related to the buyback of the instruments by the company. The MCS will also be eligible to 35 per cent (or the adjusted creditor ownership percentage) of any payments collected by the company in relation to the settlement of legal claims related to the previous management of the company and the previous auditors with respect to circumstances that arose before December 31, 2017.
Summary of the key milestones and expected dates to complete the capital restructuring:
- April 1, 2024: General Assembly Approval of Capital Increase
- April 4, 2024: Capital Increase Announcement
- April 25, 2024: Open of Subscription Period
- May 10, 2024: Closing of Subscription Period
- May 16, 2024: New Shares Allocation
- May 21, 2024: Resume Share trading
- May 31, 2024: Issuance of MCS
- June 2024: Initiate the process of settling the claims of small creditors, employees and government dues.
- with inputs from WAM
