Dubai contractor Drake & Scull seeks new investors

Dubai-listed construction and engineering company Drake & Scull International has asked advisers for proposals to review its business and find strategic investors, its chief financial officer told Reuters on Monday.

The company, one of the biggest engineering companies in the Gulf with a workforce of about 31,000 people, reported this month that it had swung into the red in the second quarter.

Like many other Gulf construction companies, it has been hit hard by an economic slowdown in the region due to low oil prices. Governments have cut spending on new projects and in some countries, including Saudi Arabia, they have delayed payments to firms for work already completed.

Drake & Scull has held informal talks with advisers in recent weeks on a possible business review and on finding new equity for the company, Kailash Sadangi said in a telephone interview.

“The new leadership is strategically transforming the business to bring it back to a profitable growth trajectory,” he said. Sadangi became CFO earlier this year as part of a management shake-up, which also saw the appointment of a new chief operating officer.

The company has appointed a legal adviser to hold discussions with the United Arab Emirates stock market regulator, the Securities and Commodities Authority, on the possibility of bringing in strategic investors and regulatory approvals that would be needed, Sadangi said.

An issue of mandatory convertible bonds is among options being considered, he added. Such bonds must be converted into underlying shares by a specific date.

Sadangi said Drake & Scull had made a strategic decision to withdraw gradually from its civil engineering business in Saudi Arabia, but would continue civil engineering operations in the UAE through its subsidiary Gulf Technical Construction Co.

Drake & Scull’s share price has dropped 10 per cent since it reported a second-quarter net loss of Dhs207.6m ($57m) in mid-August, compared to a profit of Dhs10.3m a year earlier.

Sadangi said the company was not planning at present to restructure its finances. Its liabilities totalled 6.2 billion dirhams on June 30, according to its financial statements.