EU ‘frugals’ formally oppose Macron-Merkel plan

Above, people sit at the terrace of Cafe Gavlen after it reopened in Copenhagen on May 18, 2020. (AFP)
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Updated 24 May 2020

EU ‘frugals’ formally oppose Macron-Merkel plan

  • Austria, the Netherlands, Denmark and Sweden, wants emergency help for badly affected countries to take the form of one-off loans

VIENNA: EU member states Austria, Sweden, Denmark and the Netherlands stated their opposition on Saturday to a French-German plan for a €500 billion ($545 billion) coronavirus recovery fund that would issue grants, calling for a loans-based approach instead.

French President Emmanuel Macron and German Chancellor Angela Merkel made the surprise proposal on Monday to set up a fund that would offer grants to EU regions and sectors hit hardest by the pandemic.

The idea of grants, however, is anathema to the EU’s self-styled “frugal four,” who generally oppose big spending and fear the proposal will lead to a mutualization of member states’ debt.

“We propose to create an Emergency Recovery Fund based on a ‘loans for loans’ approach,” the four countries said in a so-called “non-paper” outlining their position to other member states and released by Austria.

The two-page document listed principles they wanted the fund to adhere to, including “not leading to any mutualization of debt” and that it be of a “temporary, one-off nature with an explicit sunset clause after two years.”

Paris and Berlin, whose agreements often pave the way for broader EU deals, proposed that the European Commission borrow the money on behalf of the whole EU and spend it as an additional top-up to the 2021-2027 EU budget that is already close to €1 trillion.

The European Commission is to present its own proposal for a recovery fund linked to the EU’s next long-term budget on May 27 and said it welcomed the initiative from France and Germany.

But the document from the “frugal four” said the Commission predicts member states will suffer an “unprecedented economic contraction in 2020.”

“Additional funds for the EU, regardless of how they are financed, will strain national budgets even further,” they said.


Arabtec Holding said to hire AlixPartners for debt advisory

Updated 25 September 2020

Arabtec Holding said to hire AlixPartners for debt advisory

DUBAI: Dubai-listed contractor Arabtec Holding has hired advisory firm AlixPartners to help it restructure the company’s debt, two sources familiar with the matter said.

AlixPartners is assessing the company’s debt profile, before any potential discussions with Arabtec’s creditors, according to the sources, who declined to be named as the matter is not public.

Arabtec did not respond to a query for comment when contacted on Thursday. AlixPartners declined  to comment.

Arabtec Holding is due to hold a shareholder meeting on Thursday afternoon to decide whether to continue operating or liquidate and dissolve the firm after the pandemic hit projects and led to additional costs.

FASTFACT

 

Arabtec last month posted a first-half loss of 794 million dirhams ($216.18 million).

The company, which last month posted a first-half loss of 794 million dirhams ($216.18 million) and total accumulated losses of 1.46 billion dirhams, said on Sept. 9 that it was calling a general assembly under an article of UAE company law.

The law requires companies to vote on whether they should continue operating if their accumulated losses reach half of their issued share capital.

Shares of Arabtec Holding, which helped to build the Louvre Abu Dhabi and the world’s tallest skyscraper, the Burj Khalifa in Dubai, have plunged 56.7 percent this year. They were down almost 5 percent when a suspension of trading was triggered at 1 p.m. local time ahead of the meeting, which was being held in Abu Dhabi.

Several UAE companies have sought to extend debt maturities or agree better terms in recent years to avoid defaults, after an oil price crash hit energy services and construction.

This week, creditors started to enforce claims against Abu Dhabi-based Al Jaber Group, which has struggled since building up debt in the wake of a UAE real estate crisis and began talks with creditors in 2011.

Dubai-listed construction firm Drake & Scull is working under the UAE bankruptcy law to reach an agreement with its creditors in an out-of-court process.