Dubai: With a fresh intake of Dh450 million now in the bank, the Dubai contracting firm Drake & Scull International is ready to bid for new projects – and convince the UAE market that it can take on and complete these.
“Even as recently as a few weeks ago, no one was believing that Drake & Scull is back on track,” said Ahmed Kilani, Vice-Chairman during a media briefing. “They were worried that the company did not have the capacity to handle such projects, because we had these huge debts to clear. There were real concerns about whether we could take a project – say, with a Dh200 million contracted value – to completion.
“But by mid-August 2024, we hope to convince everyone that we are back after 5 years.”
“The balance-sheet is clean and the cash position is great. We are actually sitting with potential clients to spread the word that we can do it.”
Debt waiver in full
It’s been a few good weeks for Drake & Scull, having written off its legacy debt of Dh4 billion and over. It had a successful rights issue, which raised Dh450 million and which offers the cash cushion to pursue new projects. (This was open only to existing shareholders.)
There was also convertible sukuk issued to creditors, and which helped with the legacy debt write-off. The sukuk conversion will happen in 5 years.
Hiring again
Drake & Scull has also been busy hiring, ‘starting’ with the project estimation and business development teams. Next up will be to gradually build the project management and engineering personnel.
What about the labour force required for any projects? “With contracting, you don’t need to go and hire labour upfront,” said Kilani. “Even through the worst phase, we didn’t let go of the labour camps we operate in Dubai and Abu Dhabi. It will be relatively easy to scale up the labour needed for new projects.” (At its peak in the early part of the last decade, Drake & Scull’s workforce numbered over 15,000 labourers.)
Claims against previous management
The company will keep pressing its claims against the previous management, estimated at Dh2 billion plus, according to Kilani. The issue is with the public prosecutor in Dubai, after the case was transferred from Abu Dhabi.
“The public prosecutor will decide the status on our claims, whether to file it or not,” said Kilani. “And no, we are not pursuing an out-of-court settlement with the earlier management.”
Selective about other GCC markets
Drake & Scull in the past had been quite active in other GCC markets, with subsidiaries/JVs in Qatar, Oman and Saudi Arabia. After it was overtaken by crippling financial woes since 2018, it made exits from those ventures. “We thought it was the right course of action given the restructuring priorities,” said Kilani.
“Going forward, we will still consider pitching for tenders in those markets. But we intend to be selective, and only aim for those that can provide us some double-digit margins. The primary focus has to be to win major projects in the UAE and opt for conservative bidding in the other GCC projects.”
Pay ‘immediately’ to all small creditors
There is also good news for those Drake & Scull creditors owed sums of under Dh1 million.
“These will be cleared immediately,” said Ahmed Kilani. “All they need to do is come to the company and ask for the payment with the necessary documents. It will be done.
“As I have said, we have the fresh funds necessary to make a clean start. The small creditors payments will be cleared at the earliest.”
It’s for those owed Dh1 million and more that Drake & Scull went for the convertible sukuks, and with the settlements to be done in 5 years.
