Dubai-based contractor Arabtec Holding, which is looking to strengthen its financial structure and cut accumulated losses, has said investors will be able to subscribe to 1.5 billion new shares at AED1 a, share in its rights issue, a key step in company’s recapitalisation programme.

The rights offering is fully committed by Arabtec’s largest shareholder Aabar Investment and those shareholders who choose not to participated in the issue will be diluted up to 24.53 per cent, Arabtec said in a statement to Dubai Financial Market, without giving the date of the offering.

“The key term of the recapitalisation programme will be disclosed prior to the annual general assembly, during which a special resolution will be scheduled for the shareholders to approve the programme,” the company said in the statement. According to a 22 February bourse filing, Arabtec had said that the key terms of the programme will be finalised by the end of March.

With AED 1.5bn in new equity, Arabtec’s paid-up capital will rise from current AED4.6bn to AED6.1bn. The company subsequently, plans to reduce the capital through pro-rata cancellation of shares to cut the entire accumulated losses on the balance sheet, which at the end of last year stood at estimated AED4.6bn.

Arabtec has recorded a net loss of AED3.5bn the financial year 2016, which widened from AED2.8bn reported at the end of 2015.

“The bulk of the spike in the operating expenses is attributable to AED1.9bn in non-recurring impairment losses on receivables and other items,” the statement said, citing Arabtec’s audited financial results. “The Group’s financial performance is reflective of the adverse market conditions, which have a negative impact on the construction industry across the GCC.”

Arabtec, which was part of the joint venture that built the world’s tallest tower in Dubai, aggressively expanded its operations in the UAE and abroad but ran into financial troubles in 2014 after its chief executive and the senior management departed. It was at the heart of a stock market slump and subsequently had to restructure its business to cut costs.

The company has a current project backlog of AED18bn and it plans to grow it by at AED8-AED9bn annually at the group level.

The current backlog is 6 per cent down from AED19.3bn it had reported at the end of the financial year 2015, it has said in a 2 March presentation on Dubai Bourse website, which added that, the company sees strong opportunities in the core market of UAE, which accounted for 67 per cent of its current project backlog.

The new business it had secured in 2016 rose 38 per cent to AED8.4bn, against AED6.1bn recorded at the end of 2015, it said at the time.

The company is also conducting a strategic review of its current portfolio of investments and plans to dispose of non-core assets, it said in the presentation, adding that the company will recycle the capital to generate cash and sustainable returns on capital.

Arabtec Holding comprises three operating entities and nine investment companies, which includes its stakes in firms such as fit-out specialist Depa, Jordan Wood Industries, Arabtec Engineering Services and Gulf Steel Industries.

Arabtec aims to focus more at its home market and is becoming “increasingly selective” with projects in Saudi Arabia, the region’s biggest projects market, where the contractor had a made a major push to expand pre-oil price crash in 2014.