Some of the UAE’s largest construction companies are struggling with a depressed market for infrastructure projects in the region. And these problems have been aggravated by internal disparities among shareholders and several senior management changes.
We take a look at the firms’ latest developments this week:
Dubai-listed Arabtec Holding, which reported accumulated losses of AED4.6bn is asking banks to waive terms on its debt, according to Reuters.
The building company has been in talks with its main creditors over the past month to waive the right for banks to call in facilities extended to the business.
The waiver request comes as Arabtec seeks to ensure that the proceeds of a planned AED1.5bn rights issue will go to the company rather than be used to settle its liabilities, sources told Reuters, adding that Arabtec will no longer be in breach of debt covenants after the rights issue.
Some of the banks have provisionally agreed to Arabtec’s request to waive terms on its debt.
On Monday, Arabtec confirmed a Reuters report that Peter Pollard had been appointed as group Chief Financial Officer and will oversee the company’s recapitalisation programme.
Shareholders of Arabtec approved a planned AED1.5bn rights issue, sources present at the annual general meeting told Reuters on Tuesday.
The Arabtec Holding chairman Mohamed Al Rumaithi said that the company had instigated legal proceedings against former members of the company’s management team who have been accused of misappropriating company funds.”Everyone working in senior management and middle management who did not do their duties for the sake of Arabtec will be in court,” Al Rumaithi told shareholders at the company’s annual general meeting on Tuesday.
He did not name any individuals, nor the sums involved.
They also approved plans to reduce the company’s capital and wipe out accumulated losses. Arabtec reported a net loss attributable to shareholders in its parent of AED3.41bn for 2016, after a loss of AED2.35bn in the previous year.
At the company’s annual general meeting on Monday, Emaar Properties chairman Mohammed Alabbar has said that its board will continue to place pressure on its management to deliver profitable growth.
Shareholders approved a special resolution setting up a new employee incentive scheme that will grant up to 50 million shares per year at a par value of AED1 per share to qualifying members.
However, during the meeting a number of shareholders pressed the board to distribute more of its properties through dividends, although a 15 fils per share cash issue was approved.
Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai has appointed Abdulla Al Habbai as chairman of state-owned Dubai Holding in March.
The new chairman said that Dubai Holding has no plans for a merger as it creates a new organisational framework.
Edris Alrafi, the chief commercial officer at Meraas, has been appointed as the new CEO of Dubai Holding today. The company’s former CEO Fadel al-Ali resigned in earlier in April along with vice chairman and managing director Ahmad Bin Byat.
Union Properties plans to hold the annual general meeting on April 19. UPP informed this to their shareholders in a statement posted on Dubai Financial Market’s website.
Union Properties reported 51 per cent fall in full year net profit for 2016 to AED211.4 million. Revenues declined by more than a fifth to AED1.13 billion. The company’s portfolio was valued at AED6,099 million. The group had liabilities of AED291 million till December 2016.
Aldar Properties was the big faller on UAE exchanges in the end of March, posting a 6.2 per cent decline that dragged the Abu Dhabi Securities Exchange market general index lower.
The index closed down 0.7 per cent at 4,435.85, with Aldar accounting for 17.2 points of the index’s 33.8-point loss.
Ahmed Waheed, Vice President of the institutional desk for Menacorp Finance told a local daily: “The markets are acting like drama queens at the moment, overreacting to everything.” He said when consumer sentiment turns negative it affects the bourses like a contagion.
Waheed noted: “The Aldar Properties fall is a lag to what happened to Emaar Properties earlier in the week. The volumes are so small, with no institutional investors buying in the market, it means that what would normally be a small correction turns into a huge move.”
Aldar Properties plans to develop an AED250 million, 1,000,000 square foot public park on Reem Island. The park will be completed in 2018.
On Monday, Aldar said that it plans to build 1,272 homes on Reem Island, with prices for studio apartments starting at AED450,000. It has launched units for sale at Cityscape Abu Dhabi, which opened on Tuesday. It is Aldar’s second mid-market project after Shams Meera, on which construction started last year.
Drake & Scull
The building company said in March that it breached financial covenants in relation to a sukuk-syndicated facility and other bank facilities in 2016, after having incurred losses last year.
The company incurred an annual loss of AED815.3 m last year, as low oil prices and an economic slowdown hit the construction sector in the Gulf region, the company said in its consolidated financial results.
Drake & Scull was not able to comply with reporting requirements requested by its lenders for a conditional waiver valid until the end of 2016 and, therefore, breached financial covenants on sukuk and other debt facilities.
These loans are now overdue on their principal and interest payments, and they are technically payable on demand, the company said.