Dubai-based contractor Arabtec Holding, which is looking to strengthen its financial structure and cut accumulated losses, has invited shareholders in the second week of April to vote on proposed recapitalisation programme.

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. The new management is looking to revive the firm by restructuring its business model by cutting costs, spinning off assets, writing off losses and injecting new capital.

The company said on 2 March that the shareholders 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 participate in the issue will be diluted up to 24.53 per cent. Arabtec seeking a nod from the shareholders, allowing Aabar to subscribe to additional shares.

“Authorise Aabar Investments and/or any person associated with it – from amongst the shareholders or the owners of subscription rights–, to subscribe, on the closing day of subscription to the rights issue, for all shares that have not been subscribed for by the other shareholders,” Arabtec said in statement detailing the agenda of 18 April shareholder’s meeting.

With AED1.5bn in new equity, Arabtec’s paid-up capital will rise from current AED4.6bn to AED6.1bn. If approved by the shareholders, the firm 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 recorded a net loss of AED3.5bn for the 2016 financial year, 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 company said in a 22 March statement. “The group’s financial performance is reflective of the adverse market conditions, which have a negative impact on the construction industry across the GCC”.

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.