Dubai builder Arabtec outlined a three-year recovery plan on Thursday that would see the troubled firm sell some non-core assets, maintain a backlog of new projects of at least AED8 billion ($2.2 billion) and resume dividend distribution.
Loss-making Arabtec has been struggling for more than two years in a depressed Gulf market for infrastructure projects, its problems exacerbated by internal strife among shareholders and several senior management changes.
Under the plan, Arabtec will implement its previously announced recapitalisation scheme this year including a AED1.5 billion rights issue, according to an investor presentation posted on the Dubai bourse website.
After the rights issue, paid-up capital would increase to AED6.1 billion, Arabtec said, depending on an audit of its 2016 results.
Arabtec made a net loss of AED2.95 billion ($803 million) in the three months to Dec 31, according to Reuters calculations.
In 2017, Arabtec would become a strategic management company and dispose of non-core assets, which were not specified.
Next year, Arabtec aims to start consistently securing an annual backlog of at least AED8 billion to AED9 billion of projects, maintain a leaner organisation and ensure projects are delivered on time and on budget.
It had an overall backlog of AED18.1 billion as of Dec 31 with 67 percent of those projects located in the UAE, according to the slides.
From 2019, Arabtec would aim for consistent profit growth, continue to improve projects' gross margins and resume distribution of dividends.
Arabtec appointed in November Hamish Tyrwhitt as its chief executive, an industry veteran who served as chief executive of Australian contractor Leighton Holdings between 2011 and 2014.
Arabtec has been working with boutique investment bank Moelis to study options for the company's capital structure, sources familiar with the matter have told Reuters.For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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