Dubai Firm DSI Seeks Shareholder Approval for Financial Revamp

Drake & Scull International (DSI), a Dubai-based construction giant, is seeking shareholder approval for a significant financial restructuring plan. The company hopes to secure this green light at a rescheduled General Assembly meeting on April 1st, after an initial attempt on March 27th failed to attract enough participants.

Shafiq Abdelhamid, Chairman of the Board at DSI, expressed confidence in the upcoming meeting and emphasized the importance of shareholders understanding the details of the restructuring proposal. This plan hinges on two key measures: a substantial debt write-off and the issuance of a special financial instrument.

The debt write-off represents a significant concession to DSI's creditors. The company proposes to forgive a whopping 90% of what is owed to financial institutions and trade partners. To address the remaining 10% of the debt, DSI plans to issue mandatory convertible sukuk. A sukuk is an Islamic financial instrument similar to a bond. In this case, the convertible feature means that after five years, the sukuk will automatically convert into DSI shares.

This financial overhaul aims to resolve DSI's ongoing financial struggles. The company has faced difficulties in recent years, and this restructuring plan is seen as a critical step towards regaining stability. DSI hopes that by significantly reducing its debt burden, it will be better positioned to secure new projects and return to profitability.

The upcoming meeting will also address a potential capital increase of up to 600 million Emirati dirhams (AED). This additional funding, if approved, would provide DSI with much-needed working capital to support its ongoing operations and future endeavors.

While the details of the plan have been revealed, DSI has not yet disclosed the exact reasons behind its financial woes. However, the company's struggles are likely due to a combination of factors common in the construction industry, such as project delays, cost overruns, and fluctuations in commodity prices.

The success of DSI's restructuring plan hinges on gaining shareholder approval at the upcoming meeting. A high turnout and a favorable vote are crucial for the company's future. If approved, the plan could pave the way for DSI's financial recovery and position it for renewed growth.

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