Dubai's Drake & Scull says it has not hired adviser to seek investment

Drake & Scull has denied that it has appointed “any legal adviser in connection with bringing in a strategic investor or issuance of mandatory convertible bonds” with a view to raising new capital.

The Dubai-based contractor issued a statement to the Dubai Financial Market in response to a story published by Reuters on Tuesday, which stated the company was looking for advisers to review its business and find strategic investors.

In the statement, the contractor said that it appoints advisers “to review strategic operations and provide financing solutions” as part of its normal business, but had not appointed a specific legal adviser in relation to bringing in more investment.

Last week, Drake & Scull reported a Dh207.6 million loss attributable to its parent company for the second quarter of 2016, which it blamed on project cancellations and one-off provisions, citing project delays and cancellations that have been brought on mainly by clients in Saudi Arabia. Revenue for the quarter also dropped by 37 per cent year-on-year to Dh805m.

A note accompanying its second quarter results from auditors PwC stated that Drake & Scull had a negative cash balance of Dh300m as of June 30, and warned that if it was unable to generate sufficient cash flow within the next 12 months it “may not be able to meet its financial obligations as they fall due”.

The company still has net assets of Dh1.9 billion and in a statement accompanying its results, chief executive, Khaldoun Tabari said that despite challenges, the business remained “operationally and financially robust”.

“Due to our longstanding partnership with major international and local banks, we continue to retain strong lines of credit and secured access to funding to deliver our ongoing projects backlog,” he said.

“We are in the process of embarking on a new strategy to reposition ourselves as a leader in the market. We will also initiate fundamental changes to our group and leadership structure which will be supplemented by a reorganisation and realignment of senior management roles.”

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