Dubai contractor Drake & Scull swings to first-half profit after restructuring deal

In June, the company wrote off $1.1bn in debt and started the process of settling with its creditors

Drake & Scull International completed its debt restructuring in June after six years of negotiations with creditors. Rich-Joseph Facun / The National

Dubai-based contractor Drake & Scull International swung to half-year profitability, the company's first positive earnings since completing its six-year-long debt restructuring earlier this year.

Net income for six months to the end of June reached Dh30 million ($8.17 million) from a Dh163 million loss recorded for the first half of last year, the company said in a statement to the Dubai Financial Market, where its shares are traded.

The amount excludes the profit from the write-back of liabilities under its approved restructuring settlement plan of Dh3.76 billion, the company said.

Its half-yearly profit including the write-offs under the settlement plan reached Dh3.79 billion, DSI added.

“I am pleased to announce the company's return to profitability immediately after the completion of the restructuring plan process, which was full of serious challenges that extended for more than six years,” DSI chairman Shafiq Abdelhamid, said.

The “exceptional” positive performance comes despite the company “suffering from catastrophic financial, legal and operational conditions inside and outside the UAE … [however,] we had the courage and transparency in disclosing previous accumulated losses of Dh5.5 billion that almost led to the bankruptcy of the company”, he added.

In June, the company wrote off Dh4.18 billion ($1.1 billion) in financial and commercial debts and started the process of settling with other creditors after completing the requirements of its restructuring process.

The company, which resumed trading on the DFM in May after a suspension of more than five years, is now able to resume its activities by entering into tenders and obtaining new projects, it said in a bourse statement at the time.

As part of the settlement process, Drake & Scull has issued sukuk to the company’s creditors who have debts equal to or exceeding Dh1 million, with the Islamic bonds convertible to shares five years from the date of issuance.

It has made cash settlements for creditors with debts of less than Dh1 million, with a total amount of Dh13.6 million to be paid, according to the final list of creditors published on January 30.

The contractor fell on hard times during the three-year oil price slump in 2014, which heavily affected the property and construction sector in the region.

Trading of its shares was suspended in November 2018 after the company reported heavy financial losses.

The company’s current board has developed a “long-term business plan and set bold, transparent and practical strategic goals”, DSI said.

The aim is to return the company to “the right course of work and addressing the catastrophic mistakes and violations” of the past that derailed its progress, it added.