LONDON: Drake & Scull International aims to complete the 1 billion dirhams ($272 million) refinancing of its Saudi project debt within three months.
The Dubai-based contractor said on Monday that it had completed the restructuring of its corporate general bank debt in the UAE and has secured new credit lines and working capital facilities for its projects. Now the focus will turn to Saudi Arabia.
The contractor hit payment problems after a period of rampant acquisition-driven expansion, especially in Saudi Arabia where the construction sector suffered from the 2014 collapse of the oil price.
Back at home in the UAE, DSI said it had secured the support of all of its creditors after reaching an agreement with nine regional banks to refinance about 566 million dirhams of corporate debt.
That represents more than half of its total corporate general debt which stood at 1.07 billion dirhams at the end of the third quarter last year, the contractor said in a stock exchange filing on Monday.
The tenor and the maturity of the restructured debt have been “extended and re-termed on average for 3 years,” DSI said.
At the same time, the company secured new credit lines with the banks to help deliver ongoing projects in the UAE.
DSI said that the remainder of its general debt, comprising a 440 million dirhams sukuk will mature in November 2019.
It aims to begin talks with those sukuk holders in the second half of the fiscal year.
The contractor said it had total bank debt of 2.92 billion dirhams at the end of September 2017 – about two thirds of which is project debt.
“Our main objective is to drive a consensual restructuring plan with all our creditors across the region to rebalance our capital structure to be more efficient and conducive for our business plan and future prospects,” said Rabih Abou Diwan, investor relations director at DSI.
“The completion of our debt restructuring in the UAE will enable us to accelerate projects performance and delivery in Dubai and Abu Dhabi.
In August DSI ended a near three-year major order drought in Saudi Arabia when it was picked to help build a wastewater plant that will also generate biogas in the Eastern Province.
Saudi Arabia is emerging from a severe slowdown in the construction sector with builders expected to emerge as beneficiaries of increased government infrastructure spending in 2018.
Last month the Kingdom’s announced a record budget — with infrastructure spending surging more than 90 percent.
The budget represented a dramatic turnaround for a sector that has been hit by massive losses and job cuts as the collapse of the oil price brought some big projects to a halt and major contractors to the brink of insolvency.
Al-Rajhi Capital Research said in a note that sectors including cement, real estate, construction and building materials would stand to benefit from any increase in capital spending.