Dubai, UAE — Drake & Scull International has approved the capital restructuring of the company and increasing the share capital by AED600 million ($163 million) to about AED 3.470 billion ($944 million), by issuing 2.4 billion shares at 0.25 dirhams per share.
The subscription will open on April 25 and close on May 10. New Shares will be allocated on May 16 while share trading will resume on May 21.
Eng. Shafiq Abdelhamid, Chairman of the Board of Drake & Scull International, said the capital restructuring plan is aimed at avoiding the liquidation of the company, ensuring the best interests of shareholders, ensuring business continuity, in addition to achieving better returns for creditors compared to the returns they could obtain in the event of its liquidation.
He added, “We still have a long way to go, but we are all determined to restore the solid position that Drake & Scull enjoys in the construction sector, as the real estate market in the region, especially in the United Arab Emirates, is witnessing steady growth.”
The restructuring plan will be applicable to four entities or “Plan Companies”, as approved by the courts and will include Drake & Scull International PJSC; Drake & Scull International LLC; Drake & Scull Engineering LLC and Drake & Scull for Contracting Oil & Gas Fields Facilities LLC.
Creditors of the Plan Companies, including both financial and trade creditors, agreed to a 90 percent write-off of their claims. The remaining 10 percent balance of Plan Creditors whose total claims exceed AED1 million will be exchanged by a Mandatory Convertible Sukuk (the “MCS”).
Plan Creditors whose balance is between AED50,000 and AED1 million will have the option to receive cash or MCS, while Plan Creditors with a balance of less than AED50,000 will receive 10 percent of their balance in cash.
Mandatory Convertible Sukuk
The Mandatory Convertible Sukuk will be issued on May 31 for a period of five years and will be converted into Drake & Scull shares at maturity or earlier date, in case of certain early conversion events, as stipulated in the restructuring plan. The MCS will not be eligible for a fixed profit rate but will be entitled a share of any dividends distribution paid by the company. At maturity, the MCS will receive 35 percent of the issued capital of Drake & Scull, subject to some adjustments related to the buyback of the instruments by the company.
The MCS will also be eligible to 35 percent (or the adjusted creditor ownership percentage) of any payments collected by the company in relation to the settlement of legal claims related to the previous management of the company and the previous auditors with respect to circumstances that arose before December 31, 2017.
In June, the company will initiate the process of settling the claims of small creditors, employees and government dues.