Arabtec shares fall on concerns Dubai builder may dilute shares



Arabtec slumped the most in nearly a year on investor concern the Dubai builder's capital increase plans may dilute the shares given the conversion price and as full-year profit missed estimates.

Shares of the United Arab Emirates' biggest construction company by market value dropped 9.8 per cent, the most since March 8, to Dh2.67 in Dubai. The stock was the second biggest decliner on Dubai's benchmark DFM General Index, which slipped 1 per cent. About 2.84 million shares of Arabtec were traded, a quarter of the three-month daily average.

The builder said yesterday it plans to raise $1.74 billion through a rights issue and a convertible bond to fund internal growth, acquisitions and joint ventures. The company, which said it will not pay a dividend for 2012 to "preserve the net cash position," plans to issue 3.18bn shares at Dh1.5 each and will sell $450m in convertible bonds. Full-year net income decreased 37 per cent, missing estimates.

"The convertible bond may have a dilutive effect," according to Yazan Abdeen, a fund manager at ING Investment Management's Middle East and North Africa in Dubai. "There is a lot of uncertainty about the conversion price and the future backlog of the company, which can surprise on the upside or the downside."

The company, which mainly builds homes and offices, is also looking to increase its presence in high-growth markets and plans to expand to oil, gas and power infrastructure. Hasan Ismaik was appointed chief executive officer, replacing Riad Kamal, the company said yesterday.

* Bloomberg News

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