Arabtec eyes recapitalization, asset disposal, tighter order book.
Loss-making builder Arabtec (profile) has outlined a three-year recovery plan that would include the sale of non-core assets, a consistent backlog of new projects, and renewed dividend distribution.
Under the plan, the Dubai-based construction giant will implement its recapitalization scheme this year, including an AED 1.5 billion rights issue, to erase its current liabilities. After the rights issue, paid-up capital should increase to AED 6.1 billion, the company said.
Arabtec will also dispose of unspecified non-core assets, resolve legacy project claims and sharpen its risk management in the first phase.
In its second phase, in 2018, it plans to secure new projects and ensure on-time and on-budget delivery. The company will target an annual backlog of new projects of at least AED 8 billion from 2018.
The third phase emphasizes growth and a return to consistent profit growth and dividend distribution from 2019. The company has posted losses for the last two years, including an AED 3.4 billion net loss in 2016.
The three-phase recovery plan has been devised by Arabtec Group’s new CEO, Hamish Tyrwhitt.
The company proposed the three-pronged plan to investors and published it on the Dubai Financial Market. The full presentation is available here.