Arabtec is all set to sell two of its subsidiaries Target Engineering and Arabtec Engineering Services(AES) as the leading constructions are facing so many problems.
Arabtec quoted in a statement while having a conversation with the Dubai Financial Market on Wednesday that this move will help the company in “protecting the value of liquidation assets in the interest of all of its creditors”.
Due to the untenable financial position, the company’s shareholders in September authorized the board to file for liquidation.
The contractor there said, “In the event, a sale of any of the company’s subsidiaries or their assets is agreed, any such sale will be subject to the approvals and ratifications as may be required under applicable UAE laws”.
Arabtec has booked the corporate advisory firm deNovo to give advice on the potential sale of the target while on other hand, Lumina Capital will suggest the sale of AES.
The company started its operations in 1975, having other subsidiaries including Gulf Steel Industries, Emirates Falcon Electromechanical Company, Austrian Arabian Readymix Concrete company, and Arabtec Precast.
Arabtec, which was the center of attraction in news for building some ionic projects like the Louvre Abu Dhabi and the world’s tallest skyscraper Burj Khalifa in Dubai, has been recorded for a net loss of about Dh788 million($214.5m) in the first half of the year as the total revenue for this period fell 28 percent which sums up to Dh3.02 billion.
Till June 30, the company owed an amount of about Dh1.8 to banks and also more than Dh5.3bn to trade creditors. And by calculating on behalf of the half-year financial statement it had total liabilities of Dh10.14bn and assets of Dh9.79bn.
“In recent years, limited liquidity in the construction sector has impacted the progress of Arabtec’s projects and this has been exacerbated by the effects of Covid-19,” the company’s chairman, Waleed Al Muhairi, said in October.
He further added, “Despite efforts to pursue legal and commercial entitlements and a restructuring of the company’s finances and operations, the situation in which Arabtec finds itself today is untenable”.
Construction companies in the UAE have faced headwinds as the property market slowed in the wake of a three-year oil price drop that began in 2014. The coronavirus pandemic further compounded the problem as work was slowed on some sites to maintain social distancing and new projects were delayed or canceled.
Construction companies in the UAE have faced a blowback as the property market slowed in the wake of a three-year oil price drop that began in 2014. The coronavirus pandemic further increased the problem as the work slowed down on some sites because of the precautions like social distancing and also the new projects were delayed or even canceled.