|30 November, 2016

Dubai's Arabtec pins turnaround hopes on industry veteran Tyrwhitt

Loss-making construction company has been struggling in a depressed market for infrastructure projects

Image for illustrative purpose. Arabtec logos are seen on buildings under construction in the Marina area of Dubai.

Image for illustrative purpose. Arabtec logos are seen on buildings under construction in the Marina area of Dubai.

REUTERS/Steve Crisp


* Industry veteran Tyrwhitt is new Arabtec CEO - statement

* Will stay CEO of Depa Group, sees no impact from dual role

* Arabtec struggled with market conditions, exec changes

By Stanley Carvalho and Alexander Cornwell

ABU DHABI/DUBAI, Nov 29 (Reuters) - Dubai construction company Arabtec Holding said on Tuesday it appointed Hamish Tyrwhitt as its chief executive, hoping the industry veteran can help turn around its fortunes as Gulf contractors battle a severe downturn.

Loss-making Arabtec has been struggling for more than two years in a depressed market for infrastructure projects, its problems exacerbated by internal strife among shareholders and a number of senior management changes.

The last reshuffle saw acting CEO Mohamed al-Fahim step down and replaced by board member Saeed al-Mehairbi on an interim basis in November 2015.

Tyrwhitt, who served as chief executive of Australian contractor Leighton Holdings, since rebranded CIMIC Group , between 2011 and 2014, joined Arabtec on Nov. 28, the company said in a statement.

Mehairbi will continue to serve on Arabtec's board.

Arabtec shareholders responded positively to the move, with the stock ending Tuesday 2.3 percent higher.

Tyrwhitt, who began working in construction 30 years ago, will retain his position as group CEO of Dubai-based interior contractor Depa Group , which he has held since April.

While such a move would be considered unusual in other parts of the world, most major Gulf business figures hold multiple roles, often within the same sector.

There are also existing links between the pair: Arabtec is Depa's largest shareholder with 24.33 percent, while Fahim served as Depa chairman until May. His replacement, Ibrahim Belselah, served as Arabtec chairman between September 2011 and May 2012.

Both companies, in their statements, said the move will have no impact on their operations. In its filing, Depa said the duo had signed a "settlement and cooperation agreement", which positioned Depa as one of Arabtec's preferred partners

"My role with Arabtec complements my current role with Depa and a closer working relationship between the two companies can only benefit both," said Tyrwhitt in the Depa statement.



CHALLENGES AHEAD

Arabtec has reported eight successive quarterly losses and, in April, hired restructuring advisory firm AlixPartners to help it strengthen its capital structure and reform its business.

"The regional contracting industry remains challenged for the next few years, so anybody coming to Arabtec has legacy problems," said Sanyalaksna Manibhandu, head of research at NBAD Securities, adding it would be tough to turn the firm around.

Gulf contractors are battling a downturn caused by reduced spending on infrastructure projects by the state in the wake of the drop in oil prices, which has put schemes on hold and delayed payments to contractors.

($1 = 3.6729 UAE dirham)

(Reporting by Stanley Carvalho & Alexander Cornwell; Editing by David French and Alexandra Hudson) ((alexander.cornwell@thomsonreuters.com;))

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