Drake and Scull International (DSI), the Dubai-based engineering and construction services firm, has announced that it has successfully completed the restructuring of its corporate general bank debt in the UAE, and that it has secured new credit lines and working capital facilities for its ongoing and new projects portfolio.
In a statement, the company said that it has obtained the support from all its creditors for the restructuring of its corporate general debt in the UAE. In Q4 2017, it reached a consensual agreement with nine regional and local banks to refinance $154 million, which comprises of 56% of its total corporate general debt, which stood at $291.3 million as of September 30, 2017.
The tenor and maturity of the $154 million corporate general debt has been extended and re-termed on average for three years, the contractor added. Furthermore, DSI has successfully secured under the new term sheets signed on a bilateral basis with all the respective banks, new credit lines and working capital facilities for its ongoing and future projects portfolio in the UAE.
“The latest deal with the Banks reflects the confidence in the DSI turnaround plan, the resilience of the Group’s business model and the positive outlook of the Company in the MEP sector, despite the cyclical challenges that impacted the regional construction industry,” said Rabih Abou Diwan, investor relations director, Drake and Scull International.
“Our main objective is to drive a consensual restructuring plan with all our creditors across the region to rebalance our capital structure to be more efficient and conducive for our business plan and future prospects.”
The remaining tranche of DSI’s corporate general debt (comprising of $119.4 million Sukuk) will mature in November 2019. The contractor will initiate talks with its sukuk holders to refinance this tranche in the second half of the fiscal year 2018, it said.
As of September 30th 2017, the total Bank Debt of the Group stands at $795 million. Corporate general debt and projects debt comprise 34% and 66% of total bank debt respectively.
Another upcoming strategic priority for the company is the restructuring and refinancing of its projects debt, with the initial focus on $272 million worth of funded projects debt in Saudi Arabia. The company said that it is in advanced talks with its creditors in the Kingdom and expects to complete the refinancing of its Saudi projects debt in this quarter.
“The completion of our debt restructuring in the UAE will enable us to accelerate projects performance and delivery in Dubai and Abu Dhabi. This represents a key priority for the Group as we continue to streamline the business and unlock value across all operating segments,” said Diwan.
“Furthermore, with the new corporate debt structure and the extended credit facilities along with the funding we have in place, the Company will be able to improve productivity, secure substantial contracts and boost revenue generation.”
In conjunction with the completion of Drake & Scull’s debt restructuring, Tabarak Investment has announced that it is moving ahead with its plans to support the operations of Drake & Scull International to achieve full operational recovery leading to sustainable growth.
The company has assured that its investment in DSI is strategic and long-term, and that it will continue to support the latter by completing existing projects, studying new ones targeted through Tabarak, and looking for new opportunities to diversify and expand income.
Tabarak Investment has confirmed a significant improvement in the efficiency of operations under the leadership of DSI’s new management, which will support the latter’s financial performance in 2018.