Reuters logo
3 months ago
UPDATE 1-Dubai's Drake & Scull expects to hear soon from Aramco on outstanding claims
May 8, 2017 / 11:41 AM / 3 months ago

UPDATE 1-Dubai's Drake & Scull expects to hear soon from Aramco on outstanding claims

(Adds more quotes, detail, context)

By Hadeel Al Sayegh, Tom Arnold and Saeed Azhar

DUBAI, May 8 (Reuters) - Loss-making Dubai contractor Drake & Scull International said it expects to hear "very soon" from Saudi Aramco about settling nearly half of outstanding payments owed for its work on Riyadh's King Abdullah Petroleum Studies and Research Centre.

Drake & Scull (DSI) has five claims outstanding with Aramco totalling 2.3 billion riyals and hopes to soon settle 1.05 billion riyals of them, DSI Group Chief Executive Wael Allan told Reuters.

If the matter is not settled, Allan said DSI may consider all legal options including arbitration to recover the remaining amount for its work on the research centre (KAPSARC), which cost $543 million to build and opened in 2016.

"All options are open," he said in an interview. "We feel strongly that we are due some of these claims and we will pursue them to the end."

DSI is struggling amid a depressed Gulf construction market as governments have reined in spending on infrastructure due to lower oil revenue. Allan said the company, which has put non-core assets up for sale and is seeking to reschedule debt repayments, cut its workforce by 7,000 over the past year to around 21,000.

Investors are fretting about its capital restructuring plans.

On Sunday, DSI's shares slumped nearly 10 percent after it said shareholders expressed no interest in a new share issue and had approved increasing writeoffs by up to 722 million dirhams, in addition to a previously planned capital reduction of 992 million dirhams, because of potentially unrecoverable receivables.

Its shares picked up on Monday, rising 2.5 percent to 0.409 dirhams.

Allan said DSI's total claims against companies, including Aramco, stood at around 4 billion dirhams in terms of claims and variations.

In the past three months the company has improved its collection of payments significantly.

"Some of the existing have had a cash injection in them which has enabled them to pay us and so actually in terms of Saudi we have stabilised the business reasonably well," he said.

The issue of delayed payments in Saudi Arabia eased in the final months of 2016 as the government disbursed about 100 billion riyals ($27 bln) in November and December, according to statements by officials and central bank data.

Tabarak Investment, a Dubai-based investment firm which currently does not hold any stock in DSI, agreed in February to a 500 million-dirham capital increase via a new share issue at 1 dirham per share if the securities regulator approved the further capital reduction by DSI.

The capital injection should be received by the middle of 2017, if the regulator's approval comes through, said Allan.

DSI appointed PricewaterhouseCoopers (PwC) in December to assist with examining the company's capital structure and financial liabilities and a five-year plan drafted with the help of PwC has been sent to creditor banks.

DSI is in the final stages of negotiating the sale of its Indian operations as part of plans to offload non-core assets. ($1 = 3.7502 riyals) (Editing by William Maclean and Susan Fenton)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below