Drake & Scull International (DSI) has announced it has completed a capital restructuring which will see the cancelation of three quarters of its share base and 500 million UAE dirhams ($136.1 million) invested into the business by Tabarak Investment.
In a statement published on the Dubai Financial Market on Wednesday, Drake & Scull said Tabarak Investment's injection would allow it to move ahead with plans to enhance its core competencies.
DSI has been through a tumultuous 18-month period which has seen many of its senior management roles changing twice, and more than 10,000 employees have left the business. Its last financial results for the six months to June 30 show that it declared a loss over just over 1 billion UAE dirhams, compared to a loss of 216 million UAE dirhams during the previous period, as revenue declined by 21 percent to 1.46 billion UAE dirhams. Notes to the accounts showed that by June 30, its current assets outweighed its current liabilities by just over 1 billion UAE dirhams.
However, the capital restructuring has allowed the company to strengthen its balance sheet by cancelling more than 1.7 billion UAE dirhams worth of shares, with the capital offset to wipe out historic losses of the same value. Following the reduction, Tabarak Investment has subscribed to 500 million new shares which, following earlier purchases, is now set to make it the majority shareholder in the business with around 52.26 percent of the shares (although Dubai Financial Market disclosures show that about 46.72 percent is currently held by Ajman Bank, under the terms of a financing agreement with Tabarak Investment).
DSI's new chairman, Abdulla Atatreh, said that completing the recapitalisation was "a significant milestone for the company".
He added: “The completion of the programme is a fundamental phase in rebalancing our capital structure and improving our liquidity, and the new capital injection will be used to improve operations and accelerate projects execution, in addition to securing new project awards and pursuing opportunities to diversify our income.”
Following the deal, he said that the share capital of the company now stands at 1.07 billion UAE dirhams, and that the total equity of the group had increased by 500 million UAE dirhams.
Net equity as of June 30 had stood at just 217.6 million UAE dirhams, down from almost 1.25 billion a year earlier.
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