Dubai: Arkan, the Abu Dhabi based building materials company, will start paying off its loans and other commitments from mid-December 2022.
This follows a moratorium on repayments that it entered into its with principal lenders. But this comes with a clause – Arkan will not be making any dividend payments to shareholders until late 2022.
“In light of these challenging circumstances, the Board has decided not to pay dividends for the foreseeable future,” the company said in a statement. “Furthermore, the priority of the company going forward will be to lower its significant leverage levels and it may need to explore further capital structure options in the future.”
Arkan tapped restructuring specialists Rothschild & Co to come up with a plan to resolve its debt burden and payment obligations.
This is expected to lead to Dh28 million of cost savings on an annualised basis, starting from this year.
Steep drop
The company recorded a net loss of Dh66.54 million for 2020, which included an impairment write-off amounting to Dh28.82 million, taken against a non-core associate investment from the company's book entry for the year. In 2019, it had booked a net profit of Dh46.01 million, which benefitted from a one-off gain of Dh28.61 million, from the sale of scrap assets at Emirates Cement Factory and proceeds from an insurance claim in the Cement Division.
Dh 828.68 million
Arkan's revenues in 2020, and which compares to the Dh902.44 million in 2019. The decline was was due to lower cement sales volumes and lower selling prices across both the cement and blocks divisions.'De-leverage'
"Infrastructure programmes slowed, reducing the demand for building materials," said Jamal Salem Al Dhaheri, Chairman of Arkan. But "there is light at the end of the tunnel. We have completed a further operational restructuring programme to right size the business for the current and expected market environment, which will help stabilise the business.
"These are challenging times for Arkan and going forward, the Board and Management of Arkan will primarily focus efforts on deleveraging the business."
