Debt-strapped Dubai firms remain slow in trickling cash down to trade creditors, Gulf operators Aecom and Davis Langdon have said.
The two firms, which merged last week in a $324m deal, confirmed they expect repayment delays of several years on fees from deals with Dubai companies, including state-backed Nakheel and the Dubai Road and Transport Authority (RTA).
“There’s still money outstanding, we do get paid but it comes in dribs and drabs. We’re now starting to see a bit more consistent pay,” David Barwell, Middle East chief executive for technical support provider Aecom, said in reference to work carried out for the RTA.
“[In total] we do have some quite high outstanding. It’s not an insignificant amount of money. It certainly won’t all be [paid] in the next 12 months and we’re being prepared for that by clients.”
Consultancy firm Davis Langdon, which has worked on projects including Abu Dhabi International Airport and Dubai’s Mall of the Emirates, is negotiating write-downs of between 30 and 40 percent on outstanding debts, said Kevin Sims, head of Middle East for the company.
“We’re now slowly agreeing recovery in order to see those things out. But they’re typically on payment plans of a number of years and they are seeking discounts in order to get an agreement,” said Sims, who declined to specify the total debt. “We expect to receive between 60 and 70 percent of the debt. It is trickling in. The other day we had half a million dirhams from a client.”
Of an estimated $35m order book, Dubai comprises about $5m of Davis Langdon’s UAE business, Sims said; down from 80 percent of business in early 2008.
“Through the recession as it hit, we massively expanded our UAE business by expanding down into Abu Dhabi. It brought forward some really exciting projects very quickly after the Dubai crash which helped the business enormously,” he said. “But the days of easy money have long since gone – they went with the Dubai crash. It’s a very different Middle East market now.
In the wake of the Davis Langdon takeover, Aecom now has 3,600 staff across the Middle East. Some 1,600 employees are based in the UAE, bolstering its already strong foothold in the market. The firm has consulted on projects including Saadiyat Island cultural district, Abu Dhabi and Cleveland Clinic, Abu Dhabi
Both Aecom and Davis Langdon participated as creditors in the Nakheel debt talks, where the Dubai World-owned property firm sought to restructure $10.5bn of unpaid bills. Under an agreed deal, trade creditors received a 40 percent cash payment with the remaining 60 percent paid through a publicly tradable Islamic bond, paying 10 percent return annually.
Not all of Aecom’s units have received the initial 40 percent payout, Barwell said.
“We got paid the initial sum 40 percent, but another part of the business hasn’t,” he said.
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