Dubai contractor Drake & Scull says shareholders to decide whether to dissolve firm

Shareholders of loss-making Dubai construction company Drake & Scull will meet on September 27 to decide whether to dissolve the company, Drake & Scull announced on Wednesday.

The company, which posted a second-quarter net loss of Dhs181.1m ($49.3m) compared to a year-earlier loss of Dhs182.7m, said it was calling a general assembly under an article of United Arab Emirates company law.

The law requires companies to vote on whether they should continue operating if their accumulated losses have reached half of their issued share capital.

The board will also use the general assembly meeting to inform shareholders of the firm’s current situation and plans, as well as developments in an investigation by its new management of the previous management, Drake & Scull said. It did not give any details of the investigation.

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Like many construction firms, the company has been hit by a slump in the regional building industry over the past few years; quarterly contract revenue shrank 47 per cent from a year ago in the second quarter.

It attributed the second-quarter losses mainly to cost overruns in secondary markets such as Oman, Qatar and Jordan, as well as rising debt servicing costs.

Drake & Scull’s stock price has plunged 80 per cent this year and hit a record low last week. Late last month, independent equity research outfit AlphaMena downgraded the stock to a “sell”, saying the company faced liquidity issues and was relying on debt as a last resort; it estimated the company’s net debt at Dhs2.77bn ($755m).

In mid-August, Drake & Scull appointed Yousef Al Mulla as group chief executive, replacing Fadi Feghali, who had taken the post in April. It did not explain the change.

Read more: Dubai’s Drake and Scull replaces CEO, blames ‘rumours’ for share price drop

At that time, the company said it was devising a fresh restructuring plan that would ensure its continued existence and its ability to grow and win new business.

Drake & Scull’s biggest shareholder is Ajman Bank with 13.06 per cent, according to stock exchange data. Other shareholders include local private equity firm Tabarak Investment and local businessman Adel Abdulhamed Ibrahim al-Hosani, according to Thomson Reuters data.