DUBAI, Sept 12 (Reuters) - Shareholders of loss-making Dubai construction company Drake & Scull will meet on Sept. 27 to decide whether to dissolve the company, Drake & Scull announced on Wednesday.
The company, which posted a second-quarter net loss of 181.1 million dirhams ($49.3 million) compared to a year-earlier loss of 182.7 million dirhams, said it was calling a general assembly under an article of United Arab Emirates company law.
The law requires companies to vote on whether they should continue operating if their accumulated losses have reached half of their issued share capital.
The board will also use the general assembly meeting to inform shareholders of the firm’s current situation and plans, as well as developments in an investigation by its new management of the previous management, Drake & Scull said. It did not give any details of the investigation.
Like many construction firms, the company has been hit by a slump in the regional building industry over the past few years; quarterly contract revenue shrank 47 percent from a year ago in the second quarter.
It attributed the second-quarter losses mainly to cost overruns in secondary markets such as Oman, Qatar and Jordan, as well as rising debt servicing costs.
Drake & Scull’s stock price has plunged 80 percent this year and hit a record low last week. Late last month, independent equity research outfit AlphaMena downgraded the stock to a “sell”, saying the company faced liquidity issues and was relying on debt as a last resort; it estimated the company’s net debt at 2.77 billion dirhams ($755 million).
In mid-August, Drake & Scull appointed Yousef Al Mulla as group chief executive, replacing Fadi Feghali, who had taken the post in April. It did not explain the change.
At that time, the company said it was devising a fresh restructuring plan that would ensure its continued existence and its ability to grow and win new business.
Drake & Scull’s biggest shareholder is Ajman Bank with 13.06 percent, according to stock exchange data. Other shareholders include local private equity firm Tabarak Investment and local businessman Adel Abdulhamed Ibrahim al-Hosani, according to Thomson Reuters data. (Reporting by Andrew Torchia)