Dubai contractor Arabtec reported a wider fourth-quarter loss on Monday, and its board said it was seeking shareholder approval for a Dhs1.5bn ($408.4m) rights issue to recapitalise the company.
Shares of Arabtec plummeted almost 10 per cent at the open after the results were disclosed to the market.
The builder is working with boutique investment bank Moelis to study options for the company’s capital structure, sources familiar with the matter told Reuters on Sunday.
Arabtec made a net loss of Dhs2.95bn ($803.4m) in the three months to December 31, Reuters calculated based on financial statements in lieu of a quarterly breakdown.
This compares with a net loss of 403.74 million dirhams in the corresponding period of 2015, according to Reuters‘ calculations of Arabtec’s audited financial statements.
EFG Hermes had forecast Arabtec would make a quarterly net loss of Dhs272.8m.
The company reported a net loss attributable to the shareholders of its parent of Dhs3.41bn for the year 2016, compared with a loss of Dhs2.35bn the year earlier.
The company also said its board approved a proposed capital restructuring plan and a Dhs1.5bns rights issue, which would require investor consent at the next general meeting.
Arabtec has been struggling for more than two years because of a sagging construction market, as well as internal strife among shareholders and a number of senior management changes.
In an effort to try to turnaround its fortunes, the company in November appointed industry veteran Hamish Tyrwhitt as its chief executive.
The appointment was welcomed by shareholders who in June agreed to use Dhs1bn of the company’s statutory reserves to wipe out some of Arabtec’s accumulated losses. Reuters reported in April that Arabtec had hired AlixPartners to help draw up a plan to revise its business and capital structure.
AlixPartners’ contract to reduce overheads at Arabtec was completed at the end of last year, the sources told Reuters on Sunday, declining to be named as the information is not public.