Chief executive of Arabtec’s construction unit to step down

Raja Ghanma, the chief executive of Arabtec Construction, is to step down from the company.

Mr Ghanma, who has been with the company for 23 years, is to leave the company by the end of next week.

It is understood that Mr Ghanma will not be replaced in the short-term, with his responsibilities instead being shared jointly by Arabtec Holding’s group chief executive Hamish Tyrwhitt and other members of the Arabtec Construction’s management team.

In an internal memo sent to staff, Mr Trywhitt said: “On behalf of the group’s board of directors and our management, I would like to thank Raja for his contribution to the company over the years. I’m sure you will all join me in wishing him every success for the future.”

When contacted by The National, Mr Ghanma declined to comment on his position.

Mr Ghanma is a well-known figure within Arabtec. He joined as a construction manager in the early 1990s and had helped to launch several business divisions, as well as joining the board of Arabtec Holding for a period.

He has been the chief executive of Arabtec Construction since April 2015. Before that, he was its chief operating officer.

However, since he is no longer a member of the board of Arabtec Holding or its executive team, the company is not obliged to inform the Dubai Financial Market of his departure.

Following publication of the company’s third-quarter results in November last year, when the firm declared a Dh222.5 million loss – its eighth quarterly loss in succession – Mr Ghanma said that the company was making headway in its turnaround efforts.

He said that its costs had been trimmed significantly, and argued that he believed the company would return to profit “sooner rather than later”, but argued that it was difficult to give a precise time as it continued to deal with legacy projects.

Subsequently, however, the company has posted unaudited figures for the whole of 2016 that suggest much heavier losses in the fourth quarter.

Losses attributable to its parent company had stood at Dh458m for the first nine months of 2016, but full-year losses were more than Dh3.4 billion, suggesting a loss of about Dh3bn in the final quarter. Arabtec blamed this on “a combination of impairment charges on high-risk items, which amounted to Dh2.8bn in total, as well as recurring, non-recurring and operational expenses”.

The scale of its losses have led to it embarking on a recapitalisation programme to inject a further Dh1.5bn into the business through a rights issue – a move that was approved by regulators on Wednesday.

An analysts’ note published by Egypt-based Naeem Research on Thursday said that the recapitalisation was a positive move that will allow the company to get rid of some of the “froth” from its balance sheet.

However, it said that the level of dilution that minority shareholders (those other than Aabar Investments, which currently holds 36.11 per cent) will suffer will depend on the terms of the rights issue, which have yet to be announced.

The note argued that the issue “should get priced at a discount” to the company’s share price at the time the recapitalisation was announced earlier this month, as this will encourage shareholders to participate.

“On the contrary, if the issue gets priced at a premium [to market price], subdued interest could result in a run on the stock; with shareholders [who decide not to subscribe] having no option but to cash out” before the issue, it said.

The terms of the rights issue are due to be announced next month, at the same time as the company files fully audited accounts for 2016.

mfahy@thenational.ae

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