Abu Dhabi: Shareholders of Arabtec Holding approved on Tuesday a plan for the Dubai-listed construction firm to launch a Dh1.5 billion rights issue and then reduce its capital.
The approval for the recapitalisation programme came during Arabtec’s annual general assembly, and follows principle approval from the Securities and Commodities Authority.
The programme involves a rights issue, which has been fully committed by Aabar Investments, Arabtec’s largest shareholder, as well as a capital reduction plan in which the company will cancel up to 4.6 billion shares. The capital reduction will extinguish the company’s accumulated losses of Dh4.6 billion.
In mid-February, Arabtec reported Dh3.4 billion in losses in 2016, with the figure widening from the Dh2.35 billion in losses in 2015. The company said its losses and financial performance were “a reflection of the adverse market conditions, which are having a negative impact on the construction industry throughout the GCC.”
Arabtec later put out an investor presentation outlining its plans, which will also see the company dispose of non-core investments and focus on core competencies and key geographies.
The new plans come as the company attempts to turnaround financial performance and reshuffle management. Arabtec on Monday announced the appointment of Peter Pollard as the group’s chief financial officer, replacing Ravi Murthy who had been acting CFO. The CFO appointment follows that of Hamish Tyrwhitt as the company’s chief executive officer in late November.
A Reuters report on Tuesday cited an unnamed source who said that Arabtec executives told shareholders the company would announce a profit for the first quarter of 2017.
Arabtec’s share prices inched up 0.36 per cent on Tuesday to reach Dh0.84, which is still below the Dh1 mark at which the rights issue will be set. Arabtec share prices have dropped nearly 36 per cent since the beginning of this year, according to Bloomberg data.
