Dubai's Arabtec raises $653m in rights issue

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Dubai builder Arabtec Holding has raised AED2.4bn ($653.4m) in a rights issue that will help the firm double its capital, the company said.

A total of 1.56bn new shares have been issued at AED1.5 per share and will begin trading on Sunday.

The rights issue was 30 percent oversubscribed, the company said.

The money raised would be used to implement the company’s growth strategy, with projects worth a total AED13bn across the Middle East, North Africa and Central Asia being awarded already this year.

Arabtec shares have fallen significantly this year amid concerns that its plans to double capital to $1.8bn through the rights issue and a convertible bond, potentially diluting existing shareholders’ value.

Denying there would be any dilution in value, the company said in a statement it aimed to pay a dividend of at least 10 percent per annum as part of a commitment to enhance shareholder value.

“I am extremely pleased with the conclusion of our rights issue process, which was a true success with the vast majority of our existing shareholders subscribing, and an indication of trust from our shareholders in the company’s future,” managing director and CEO Hasan Abdullah Ismaik said.

“We are now ready to accelerate the implementation of our growth strategy and ultimately deliver value to our shareholders, especially with the dynamic progress being achieved across our business portfolio which is already helping to grow our backlog.

“So far in 2013, the Company has been awarded projects with a gross value of AED13 billion in the Middle East, North Africa and Central Asia, further strengthening Arabtec’s financial and commercial position, and expanding its regional and global footprint.

“There is a strong pipeline of potential new contracts to complement our growing backlog of projects and the outlook for the construction sector is positive, underpinned by government expenditure and regional economic development.”

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