Dubai contractor Arabtec outlines three-year recovery plan

Dubai builder Arabtec outlined a three-year recovery plan on Thursday that would see the troubled firm sell some non-core assets, maintain a backlog of new projects of at least Dhs8bn ($2.2bn) and resume dividend distribution.

Loss-making Arabtec has been struggling for more than two years in a depressed Gulf market for infrastructure projects, its problems exacerbated by internal strife among shareholders and several senior management changes.

Under the plan, Arabtec will implement its previously announced recapitalisation scheme this year including a Dhs1.5bn rights issue, according to an investor presentation posted on the Dubai bourse website.

After the rights issue, paid-up capital would increase to Dhs6.1bn, Arabtec said, depending on an audit of its 2016 results.

Arabtec made a net loss of Dhs2.95bn ($803m) in the three months to Dec. 31, according to Reuters calculations.

In 2017, Arabtec would become a strategic management company and dispose of non-core assets, which were not specified.

Next year, Arabtec aims to start consistently securing an annual backlog of at least Dhs8bn to Dhs9bn of projects, maintain a leaner organisation and ensure projects are delivered on time and on budget.

It had an overall backlog of Dhs18.1bn as of Dec. 31 with 67 per cent of those projects located in the United Arab Emirates, according to the slides.

From 2019, Arabtec would aim for consistent profit growth, continue to improve projects’ gross margins and resume distribution of dividends.

Arabtec appointed in November Hamish Tyrwhitt as its chief executive, an industry veteran who served as chief executive of Australian contractor Leighton Holdings between 2011 and 2014.

Arabtec has been working with boutique investment bank Moelis to study options for the company’s capital structure, sources familiar with the matter have told Reuters.