The Dh600 million capital increase is a decisive moment in Drake & Scull's plans for a full-scale comeback. Image Credit: Supplied

Dubai: The Dubai contractor Drake & Scull International enters another key moment in its turnaround plans with the launch of a Dh600 million capital increase.

This will be done through 2.4 billion shares, with existing shareholders able to subscribe at a discounted 25 fils a share.

The process is open only to current shareholders. The process will continue until May 10, 2024, and is 'considered one of the final steps to complete the restructuring process'.

New investors?

On whether new and strategic investors would be considered in any future plans, Shafiq Abdelhamid, Chairman,  said: The entry of a strategic shareholder will undoubtedly constitute an added value to the company.

"But upon the request of the Securities and Commodities Authority, opening the door for subscription to the stock is limited to the current shareholders.

"However, if the subscription process is not covered by them, approval to get other than existing shareholders will be considered. On the other hand, in the future there is nothing preventing the entry of strategic partners or shareholders by purchasing shares directly from the market."

Subscriptions can be done through the main offices of Emirates NBD across the UAE, in addition to branches operated by Commercial Bank of Dubai in Abu Dhabi, Dubai and Sharjah.

Emirates NBD has also allocated a special number to respond to all shareholders’ inquiries (800 3623 476). Drake & Scull shareholders must ensure that their names appear in the company’s share register maintained with DFM by the end of DFM's working hours on the entitlement date of April 24.

In addition, they must possess an Investor Number (NIN) registered with DFM to be eligible to subscribe to the new shares.

It is expected that trading in the company's shares will resume trading on DFM from May 21. (It was struck off from trading in 2018 after the then management confirmed true extent of losses were not disclosed and which then led the company failing to disclose financials.)

Clearance on restructuring plan

The company's restructuring plan was approved on November 1 last year by Dubai Court of Appeal. (This overturned a lower's decision to go for liquidation.)

Then, the DFM authorities approved on March 4 to return Drake & Scull  shares to trading, 'subject to the completion of the minimum capital increase subscription of Dh300 million'.

Incidentally, Drake & Scull has the leeway to raise its capital up to Dh3.47 billion from the current Dh1.07 billion.

“We went through a long, arduous, and challenging journey that we overcame together and worked side by side to restore the company to its leadership position in the market," said Abdelhamid. 

"We have developed a comprehensive capital restructuring plan aimed at avoiding the liquidation of the company, ensuring the best interests of shareholders, ensuring business continuity, in addition to achieving better returns for creditors compared to the returns they could obtain in the event of its liquidation.

"Moreover, the business continuity of Drake and Scull will support the national economy and enhance confidence in the financial market.”

What the restructuring plan states

Creditors agree to write down 90 per cent of their claims in exchange of:

  1. Receiving a Mandatory Convertible Sukuk (MCS) instrument representing 10 per cent of their claims, or
  2. Cash payment amounting to 10 per cent of their claims depending on their exposure.
  3. All plan creditors with balances in excess of Dh1 million will receive MCS, while plan creditors with balances less than Dh1 million will receive cash.
  4. Upon conversion, the MCS are expected to receive 35 per cent of the issued share capital of the company, subject to certain adjustments.