PricewaterhouseCoopers (PwC) has been appointed as strategic adviser to Drake & Scull International (DSI) in a move sources said could lead to a range of options for the Dubai-based contractor including bringing in a minority investor or a debt restructuring.
DSI's board approved the choice of the consultancy firm as strategic and financial adviser to assist with "examining the company's capital structure and financial liabilities", DSI said in a bourse filing.
The company has been battling a depressed Gulf construction market, as governments rein in spending on infrastructure schemes after oil prices declined, reporting worsening earnings in nine of the last 11 quarters.
DSI announced last month it was reviewing its business to address market challenges which could lead to a withdrawal from non-core markets, retrenching on civil works in Saudi Arabia and a more conservative stance on recovering certain receivables.
Sources familiar with the matter told Reuters PwC's remit could include a debt restructuring, with the possibility that a plan could be put to creditor banks as soon as early next year.
A note attached to DSI's third-quarter financial statement from PwC, which also audits the firm, warned that if the company failed to generate sufficient cash flow within the next year, it may not be able to meet upcoming obligations.
The sources said the company had also held talks with the Emirates Securities Authority about issuing mandatory convertible bonds, but any such issue could prove tricky because the company's share price was below the 1 dirham par value, their nominal value for accounting purposes.
DSI shares were down 1.2 percent as of 1156 GMT at 0.51 dirhams ($0.14), against a 1.8 percent rise in the wider Dubai market .
Another option involves attempting to bring in a strategic minority investor, the sources said.
DSI declined to comment.
Like other contractors, DSI has been hurt by delayed payments for projects, particularly in Saudi Arabia.
The company is owed an unknown amount from Saudi Aramco for the King Abdullah Petroleum Studies and Research Center, a $543 million project in Riyadh. The company remains in negotiations with the state oil giant about the outstanding payment, the sources said.
Aramco was not immediately available to comment.
DSI was owed 1.16 billion dirhams from "unapproved change orders" relating to three contracts, as well as a further 564 million dirhams due from customers on contracts under discussion and negotiation, according to its third-quarter financial statement.
($1 = 3.6729 UAE dirham)
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