Arabtec Holding unveiled a three-step recovery plan on Thursday as it seeks to win support from shareholders for its latest fund-raising.
The contracting group, which is seeking an injection of Dh1.5bn from investors through a rights issue, said that it intends to carry out each element of its plan every year for the next three years.
In a nutshell the three phases are: stabilise in 2017, prepare in 2018, grow in 2019 and beyond.
For this year Arabtec’s priority is to stabilise the loss-making business through the issue, which is part of a recapitalisation plan aimed at ridding itself of accumulated losses of Dh4.6bn. Arabtec also plans to introduce better risk-management, solve legacy issues and sell off ‘non-core’ assets.
Next year, its plan is to prepare the business for the future, which means keeping costs in check, delivering projects on time and to budget and ‘consistently’ securing a backlog of projects worth about Dh8-9bn.
The final phase, which is to begin in 2019, will focus on growth, most notably profit margins and cash generation, as well as boosting capabilities in: engineering procurement, construction and management; infrastructure; mechanical, electrical and plumbing work; and specialist construction. This would also be the first year in which it is targeting a potential dividend payment to shareholders.
Arabtec’s immediate priorities include a “strategic review” of all current investments and a disposal of any divisions it considers to be non-core.
It also has an “action plan on legacy claims, receivables, and WIP (work in progress) to enable the group to focus on the future growth of the business without being restricted by problems from the past,” according to a document that it filed on the Dubai Financial Market.
Arabtec will initially increase the size of its capital base from Dh4.6bn to Dh6.1bn under the rights issue, but it then plans to cancel 4.5bn shares to help extinguish its Dh4.6bn of accumulated losses.
The plan has effectively been underwritten by its biggest shareholder, Aabar Investments. Aabar owns 36.11 per cent of Arabtec, but its stake may increase if other shareholders decide against supporting the new rights issue. The price for this is to be set this month when the company files audited accounts for 2016.
Preliminary accounts filed last month show a net loss attributable to Arabtec of Dh3.4 billion — Dh2.8bn of which was due to impairment charges.
Allen Sandep, a director of research at Naeem Holding, welcomed Arabtec’s move to lay out its new strategy, but said “ execution is key”.
“How are they going to turnaround a business from a loss-making entity for years back to where they were?”.
He said that based on the last filed accounts, for the nine months to September 30, 2016, the company had net working capital of about Dh3bn, with Dh10bn of receivables due and Dh7bn of payables owed. However, given the heavy level of provisioning in the final quarter, when the company seems to have suffered a loss of Dh3bn, these “may have evened out”.
“But we’ll only know only know for sure once the results are out. As long as they don’t take a further haircut, well and good. If they have to write off more, and they are not able to pass this on to subcontractors, there may be more impairments.”
He said a write-off as sizeable as the one which its preliminary results indicate should mean that the company has got most of its bad news out of the way.
“Going forward, I don’t think things will be as bad for them,” said Mr Sandeep.
He argued that the level of support the company will receive from investors other than Aabar will probably depend on the price at which the rights issue is set.
“My view is that they would price it at a discount to the market price, so most of the shareholders should subscribe.”
mfahy@thenational.ae
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Match info
Manchester United 4
(Pogba 5', 33', Rashford 45', Lukaku 72')
Bournemouth 1
(Ake 45 2')
Red card: Eric Bailly (Manchester United)
COMPANY%20PROFILE
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The specs
Common to all models unless otherwise stated
Engine: 4-cylinder 2-litre T-GDi
0-100kph: 5.3 seconds (Elantra); 5.5 seconds (Kona); 6.1 seconds (Veloster)
Power: 276hp
Torque: 392Nm
Transmission: 6-Speed Manual/ 8-Speed Dual Clutch FWD
Price: TBC
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
SERIES INFO
Afghanistan v Zimbabwe, Abu Dhabi Sunshine Series
All matches at the Zayed Cricket Stadium, Abu Dhabi
Test series
1st Test: Zimbabwe beat Afghanistan by 10 wickets
2nd Test: Wednesday, 10 March – Sunday, 14 March
Play starts at 9.30am
T20 series
1st T20I: Wednesday, 17 March
2nd T20I: Friday, 19 March
3rd T20I: Saturday, 20 March
TV
Supporters in the UAE can watch the matches on the Rabbithole channel on YouTube
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
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The Limehouse Golem
Director: Juan Carlos Medina
Cast: Olivia Cooke, Bill Nighy, Douglas Booth
Three stars
The%C2%A0specs%20
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Auron Mein Kahan Dum Tha
Starring: Ajay Devgn, Tabu, Shantanu Maheshwari, Jimmy Shergill, Saiee Manjrekar
Director: Neeraj Pandey
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TOURNAMENT INFO
Women’s World Twenty20 Qualifier
Jul 3- 14, in the Netherlands
The top two teams will qualify to play at the World T20 in the West Indies in November
UAE squad
Humaira Tasneem (captain), Chamani Seneviratne, Subha Srinivasan, Neha Sharma, Kavisha Kumari, Judit Cleetus, Chaya Mughal, Roopa Nagraj, Heena Hotchandani, Namita D’Souza, Ishani Senevirathne, Esha Oza, Nisha Ali, Udeni Kuruppuarachchi
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Director:Shakun Batra
Stars:Deepika Padukone, Siddhant Chaturvedi, Ananya Panday, Dhairya Karwa
Rating: 4/5
Name: Colm McLoughlin
Country: Galway, Ireland
Job: Executive vice chairman and chief executive of Dubai Duty Free
Favourite golf course: Dubai Creek Golf and Yacht Club
Favourite part of Dubai: Palm Jumeirah
CHATGPT%20ENTERPRISE%20FEATURES
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Killing of Qassem Suleimani
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Founder: Abdulla Almoayed
Based: UAE
Founded: 2017
Number of employees: 35
Sector: FinTech
Raised: $13 million
Backers: Berlin-based venture capital company Target Global, Kingsway, CE Ventures, Entrée Capital, Zamil Investment Group, Global Ventures, Almoayed Technologies and Mad’a Investment.
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Director: Jesse Armstrong
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England
Arsenal, Chelsea, Liverpool, Manchester City, Manchester United, Tottenham Hotspur
Italy
AC Milan, Inter Milan, Juventus
Spain
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Bogleheads follow simple investing philosophies to build their wealth and live better lives. Just follow these steps.
• Spend less than you earn and save the rest. You can do this by earning more, or being frugal. Better still, do both.
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• Keep it simple. Complexity is your enemy. You can build a balanced, diversified portfolio with just a handful of ETFs.
• Forget timing the market. Nobody knows where share prices will go next, so don't try to second-guess them.
• Stick with it. Do not sell up in a market crash. Use the opportunity to invest more at the lower price.
Fourth-round clashes for British players
- Andy Murray (1) v Benoit Paire, Centre Court (not before 4pm)
- Johanna Konta (6) v Caroline Garcia (21), Court 1 (4pm)
The%20BaaS%20ecosystem
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SHALASH%20THE%20IRAQI
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MATCH INFO
Uefa Champions League semi-final, first leg
Bayern Munich v Real Madrid
When: April 25, 10.45pm kick-off (UAE)
Where: Allianz Arena, Munich
Live: BeIN Sports HD
Second leg: May 1, Santiago Bernabeu, Madrid
