| 19 June, 2017

Dubai's Drake & Scull in talks with banks to sell plots of land

Foreign workers are seen at a construction site in Dubai, United Arab Emirates,.

Foreign workers are seen at a construction site in Dubai, United Arab Emirates,.

REUTERS/Ahmed Jadallah

19 June 2017

Dubai-based building contractor Drake and Scull International PJSC (DSI) is in talks with banks to divest some of its assets, the company’s acting chief financial officer told Thomson Reuters Projects on Sunday.

Earlier this year, the cash-strapped firm announced a turnaround and capital restructuring plan which included a number of cost-cutting measures and capital raising initiatives.

As part of this overhaul, DSI CEO Wael Allan told Thomson Reuters Projects in April the company plans to sell some of its ‘non-core’ assets in 2017, helping to fund a cash injection of approximately 900 million UAE dirhams ($245 million) in equity this year.

“So what we’re doing is we’re doing the groundwork now, so we’re doing some valuations, some have already been done to determine the value (of assets),” acting chief financial officer Feras Kalthoun said on the sidelines of a press conference in Dubai on Sunday.

“We’re in talks with investment banks to try and market these assets,” he said, adding that some of these assets would include the company’s land bank.

In March, DSI announced it had sold its stake in the One Palm residential development on Palm Jumeirah to Omniyat Properties, its joint venture partner in the project.

“We have plots of land,” Kalthoun said.

“We’ve already signed for One Palm, but we’ve got other land banks and we’re also actively soliciting interest in these plots of land.”

He called the size of the land bank “small, not huge”.

The divestment is part of the company’s strategy to focus on its core competency and business in the United Arab Emirates, he said. However, he did not indicate timelines for the divestment.

“If we can get it done sooner the better, because we want to focus on MEP [mechanical, electrical and plumbing],” he said.

Asked whether the assets being considered include DSI’s other entities, Kalthoun said: “Everything is open for consideration.”

Earlier in the year, DSI announced to the Dubai Financial Market it had secured a binding offer from Dubai-based strategic investor Tabarak Investment for a capital injection of 500 million UAE dirhams. Last week it was also announced Tabarak Investment had become DSI's biggest shareholder after acquiring the shares of former chief executive Khaldoun Tabari.

© Zawya 2017