Drake & Scull International, a leading general contracting and engineering company, has announced that approval has been given to recommendations made by its board of directors for the capital restructuring of the company and increasing its share capital by AED600 million ($163.3 million) to AED3.470 billion ($944 million) through issue of 2.4 billion shares at AED0.25 per share.

 

Announcing this at the General Assembly held today (April 1), Drake & Scull International said the restructuring strategy aims to rebuild confidence in the company by focusing on its core strengths, such as: mechanical and electrical works (MEP), as well as the high potential water and environment operations 'Passavant' and oil and gas sector.

 

The restructuring plan will be applicable on 4 entities “Plan Companies”, as approved by the courts. It will include: Drake & Scull International PJSC; Drake & Scull International LLC; Drake & Scull Engineering LLC and Drake & Scull for Contracting Oil & Gas Fields Facilities LLC.

 

On the strategic move, Chairman Engineer Shafiq Abdelhamid said: "We went through a long, arduous, and challenging journey that we overcame together and worked side by side to restore the company to its leadership position in the market."

 

"We have developed a comprehensive capital restructuring plan aimed at avoiding the liquidation of the company, ensuring the best interests of shareholders, ensuring business continuity, in addition to achieving better returns for creditors compared to the returns they could obtain in the event of its liquidation. Moreover, the business continuity of Drake and Scull will support the national economy and enhance confidence in the financial market," noted Abdelhamid.

 

"We still have a long way to go, but we are all determined to restore the solid position that Drake & Scull enjoys in the construction sector, as the real estate market in the region, especially in the United Arab Emirates, is witnessing steady growth," he stated.

 

Drake & Scull International said the creditors of the plan companies, including both financial and trade creditors, have agreed to a 90% write-off of their claims. 

 

The remaining 10% balance of Plan Creditors whose total claims exceed AED1 million will be exchanged by a Mandatory Convertible Sukuk (MCS). 

 

Plan Creditors whose balance is between AED50,000 and AED1 million will have the option to receive cash or MCS, while plan creditors with a balance of less than AED50,000 will receive 10% of their balance in cash.

 

The mandatory convertible sukuk will be issued for a period of 5 years and will be converted into Drake & Scull shares at maturity or earlier date, in case of certain early conversion events, as stipulated in the restructuring plan, said the Dubai contractor in a statement. 

 

The MCS will not be eligible for a fixed profit rate but will be entitled a share of any dividends distribution paid by the company. 

 

At maturity, the MCS will receive 35% of the issued capital of Drake & Scull, subject to some adjustments related to the buyback of the instruments by the company, it stated.

 

The MCS will also be eligible to 35% (or the adjusted creditor ownership percentage) of any payments collected by the company in relation to the settlement of legal claims related to the previous management of the company and the previous auditors with respect to circumstances that arose before December 31, 2017, it added.-TradeArabia News Service