Drake & Scull completes UAE debt restructuring

08/01/2018 11:19 AST

Drake & Scull International (DSI), a regional leader in engineering and construction services, announced today that it has successfully completed the restructuring of its corporate general bank debt in the UAE and has secured new credit lines and working capital facilities for its ongoing and new projects portfolio.

DSI has obtained the support from all its creditors for the restructuring of its corporate general debt in the UAE.

The company reached in Q4 2017 a consensual agreement with nine regional and local banks to refinance Dh566 million ($154.1 million) comprising 56 per cent of its total corporate general debt standing at Dh1.07 billion as of September 30, 2017, it said.

The tenor and the maturity of the Dh566 million corporate general debt have been extended and re-termed on average for three years. Additionally, the company successfully secured under the new term sheets signed on bilateral basis with all respective banks, new credit lines and working capital facilities for its ongoing and future projects portfolio in the UAE.

The remaining tranche of the company's corporate general debt comprising the Dh440 million sukuk will mature in November 2019. The company will initiate talks with its sukuk holders to refinance this tranche in the second half of the fiscal year 2018.

As of September 30, 2017, the total bank debt of the group stands at Dh2.92 billion. Corporate general debt and projects debt comprise 34 per cent and 66 per cent of total bank debt, respectively.

Another upcoming strategic priority of the company's plan include the restructuring and refinancing of its projects debt with the initial focus on approximately Dh 1 billion of funded projects debt in Saudi Arabia. The company is concurrently in advanced talks with its creditors in Saudi Arabia and expects to complete the refinancing of its Saudi projects debt in this quarter.

Rabih Abou Diwan, investor relations director, Drake & Scull International, commented: "The latest deal with the banks reflects the confidence in the DSI turnaround plan, the resilience of the group's business model and the positive outlook of the company in the MEP sector, despite the cyclical challenges that impacted the regional construction industry.

"Our main objective is to drive a consensual restructuring plan with all our creditors across the region to rebalance our capital structure to be more efficient and conducive for our business plan and future prospects.

"The completion of our debt restructuring in the UAE will enable us to accelerate projects performance and delivery in Dubai and Abu Dhabi. This represents a key priority for the Group as we continue to streamline the business and unlock value across all operating segments.

"Furthermore, with the new corporate debt structure and the extended credit facilities along with the funding we have in place, the Company will be able to improve productivity, secure substantial contracts and boost revenue generation," he said.

"We are concurrently also assessing our funding requirements for our ongoing and future projects across all markets. We expect to reach bilateral consensus with our lenders to refinance our projects debt and upon completion we will be considering syndication across all the debt structure in the fiscal year 2018."

In conjunction with the completion of Drake & Scull's debt restructuring, Tabarak Investment has announced that it is moving ahead with its plans to support the operations of Drake & Scull International to achieve full operational recovery leading to sustainable growth. The company has assured that its investment in DSI is strategic and long-term, and that it will continue to support the latter by completing existing projects, studying new ones targeted through Tabarak, and looking for new opportunities to diversify and expand income.

Trade Arabia