Dubai: The Dubai engineering company Drake & Scull International’s accumulated losses remains stuck at Dh5 billion even as the company hopes a restructuring programme will find favour. The losses represent a staggering 470 per cent of the capital by end September.
In a statement, Drake & Scull said that it is finalising a restructuring plan and to be backed up by a revised business strategy. It hopes to raise new equity and win projects, which would show proof of the company’s operational strengths.
At the same time, it will ‘pursue legal cases to collect all company receivables’, the company added.
A Dubai court is looking into the plan put forth by the company and has brought in an external specialist to go over it and come up with recommendations.
What brought on the losses?
It was in 2018 that the company, at one time among the biggest engineering and contracting firms in the Gulf, confirmed that actual losses were much bigger than what it had been reporting until then. Since then, it has engaged in detailed negotiations with lenders and creditors to come up with potential solutions and pay the sums back.
The accumulated losses were brought on by:
• Poor performance on legacy projects. The actual costs of completing these projects were more than the budgets. And then there was the liquidating of (performance) bonds.
• Idle labour cost was high due to absence of new projects in addition to bank bans and court orders.
It was recently that a local court ordered the liquidation of another major contractor, Arabtec, after years of losses and massive debt burden.