Arabtec Holding plans to use AED1bn ($272m) of its statutory reserves to write off part of its accumulated losses, as the biggest-listed contractor in the UAE undergoes a capital restructuring.
A shareholders meeting has approved the firms plans. The use of AED1bn will cover 44 per cent of the companys accumulated losses, leaving a reserves balance of AED148m, UK news agency Reuters cited company officials as saying at the meeting.
Arabtec has also hired US restructuring advisory firm AlixPartners to help it strengthen its capital structure and reform its business. The work of advisers in drawing up a restructuring plan is going very well and should be completed very soon, said Mohamed al-Mehairi the firms vice-chairman.
Like many regional contractors, Arabtec has struggled with the slowdown in regional economies as Gulf governments slash spending and cap infrastructure products on the back of lower oil prices.
The company has reported a net loss despite rising revenues in the first quarter of this year, attributing weak results to market conditions. Its net loss fell to AED46.4m in the first three months of this year, compared with AED279.8m in the same period last year.
Arabtec has reported losses in the past five quarters, but the first quarter of 2016 is the first three-month period that saw revenues increase to AED1.94bn from AED1.79bn in the first three months of 2015.
In 2014, Arabtec agreed in principle to build 1 million homes for middle-income Egyptians by 2020 in a $35bn project, but the company and the Egyptian government have not agreed on specifics since then, and Egyptian officials have said talks are now focusing on much smaller numbers of housing units.