The first step to finally turn Arabtec’s financial performance in the long term after nine consecutive quarters of losses is to reduce its capital and launch a Dh1.5 billion rights issue. This breakthrough was given by an analysts.
Arabtec is said to schedule a general assembly meeting. This meeting is set up to seek the approval from shareholders of the capital reduction plan and the Dh1.5 billion rights issue.
In 2016, Arabtec (the Dubai-listed construction company) reported a net loss of Dh3.4billion.
“Nobody in their most pessimistic expectations expected a number like this. If they announce these numbers without announcing any plans for refinancing or rebuilding the capital, that would have been worse for a public company. I think shareholders will have to take some more pains going forward as part of the restructuring of the capital” said Mohammad Yasin (managing director at National Bank of Abu Dhabi Securities).
In 2018, it is projected that the company might start seeing improvements but I the short term.
“I think Arabtec can be a good turnaround story, but we’re not sure where from because we’re not sure how much of a loss the current shareholder will absorb before capital restructuring happens, and until that happens, we don’t know where the share price will bottom out,” Yasin said.
Meanwhile, Hamish Tyrwhitt (group chief executive officer of Arabtec), said in an interview that the board’s decision to reduce capital follows an assessment of the company’s financial and operational position, as well as the appointment of new leadership.