Heavily-indebted contracting firm Drake & Scull has said that its board has passed a restructuring plan that will allow the company to continue trading.

A notice informing the Dubai Financial Market (DFM) of resolutions passed at a company board meeting on Monday stated that a restructuring plan approved by its chairman was backed by a majority of attendees, who also gave approval for the “continuation of the company in carrying out business”.

The majority of shareholders also backed a resolution to give board directors the right to “liquidate/close/sell certain branches of the company or subsidiaries according to the restructuring plan”, according to the announcement.

Resolutions were also passed allowing Drake & Scull to sell its shareholding it Wahat Al Zawya - a development company listed on Abu Dhabi's junior market in which Drake & Scull's major shareholder, Tabarak Commercial Investment (Tabarak), is the majority shreholder. The filing stated that Tabarak did not vote on the outcome of this deal, nor on a deal which approved the acquisition of another company, Golden Sands Investment, from Tabarak by a pair of Drake & Scull subsidiaries. This deal was initially concluded on December 20, 2017, according to the filing.

Nobody from Drake & Scull was immediately available to comment.

Drake & Scull has endured several years of heavy losses, and despite a capital restructuring in 2017, which saw three quarters of its share capital expunged ahead of a 500 million dirham investment by Tabarak, heavy losses have continued to mount.

The company's shares are currently suspended from trading on the DFM and it has yet to disclose full-year accounts for 2018. The last accounts filed for the third quarter of 2018 showed a 497.3 million dirham ($134.4 million) net loss to equity holders on negative revenue of 9.4 million dirhams in the three-month period. The company ended the period with accumulated losses on its balance sheet of over 1.1 billion dirhams and liabilities exceeding assets of 401.4 million dirhams. (Read more here).

On the day the results were announced, the company said that a restructuring committee had been formed to devise a plan "to restore operations and stabilise the business". It said Trussbridge Advisory (DIFC), Deloitte, Allen & Overy and Al Tamimi & Company had all been appointed to work on different aspects of the restructuring.

(Writing by Michael Fahy; Editing by Mily Chakrabarty)

(michael.fahy@refinitiv.com)

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