Dubai: The engineering firm Drake & Scull International has raised more than Dh450 million via a new share issue, and which now sets the company up for a return to the Dubai Financial Market on May 21. The stock had been suspended from November 2018.
The proceeds from the share offer will 'certainly contribute' to completing the financial and operational restructuring process, as well as 'working on the growth of Drake & Scull International business', said a statement.
Plus, it will help the company commit to 'implementing its future business plan' as well as financing new projects. The plan is also to use the net proceeds to increase working capital and capex requirements and 'support operations, as well as future growth and any potential acquisitions'.
The company's new capital will be Dh2.88 billion, distributed over 2,887 million shares.
Subscription to the new capital was priced at 25 fils per share (which is a discount of 75 fils on the par value).
The discount will be recorded as a 'negative reserve in the balance-sheet'.
"The success of the IPO will enable the company to regain its position in the markets of UAE, GCC and other regions," said Shafiq Abdelhamid, Chairman. "The road ahead of us is still long, but we are all determined to restore the solid position that Drake & Scull enjoys in the construction sector. The real estate market in the region, especially in the UAE, is witnessing remarkable growth."
Looming over all these plans is the Dh5 billion plus by way of accumulated losses. The company is pursuing investigations against former management officials in a bid to reclaim most or part of the funds.
On the operational side, there have been new project wins in the UAE and outside. The company will be hoping to raise more in the coming months.
What the restructuring plan holds
The plan stipulates writing off 90 percent of the liabilities of financial and trade creditors and issuing mandatory convertible bonds that will be converted into shares - after 5 years - in line with the value of the remaining 10 per cent of liabilities.
These will appear in the upcoming financial results. The company plans to 'strengthen its portfolio, own projects, obtain new projects with a good profit margin, and complete implementation of the current project portfolio'.
