Dubai Contractor Drake & Scull Stages Impressive Comeback on Stock Market

Shares of Dubai-based construction giant Drake & Scull International (DSI) witnessed a significant surge on Wednesday, marking their triumphant return to the Dubai Financial Market (DFM) after a lengthy hiatus of over five years. The stock price jumped by an impressive 30%, opening at Dh0. 33 (USD 0. 09) at 10. 05 AM UAE time, a significant increase from its previous trading price of Dh0. 25 (USD 0. 07).

This positive development comes on the heels of DSI's successful debt restructuring and complex financial reorganizations. The company's return to the DFM signifies a new chapter, marked by financial stability and renewed investor confidence.

The recent share price increase can be attributed to several factors. The restructuring process, which involved negotiations with creditors, resulted in a significant reduction of DSI's accumulated debt. In a filing submitted earlier this week, the company revealed that its accumulated losses stood at Dh5. 5 billion (USD 1. 5 billion) as of March 31, 2024. However, DSI projects that the benefits of the restructuring will be realized in the second quarter of this year, leading to an overall improvement in equity of approximately Dh4. 6 billion (USD 1. 2 billion).

A key aspect of the restructuring involved writing off a substantial portion of creditor claims. DSI reports a capital gain of Dh3. 4 billion (USD 0. 9 billion) due to this write-off, effectively reducing its financial liabilities. Additionally, the company reversed accrued interest expenses and provisions for legal cases, amounting to roughly Dh414 million (USD 113 million). Furthermore, DSI issued mandatory convertible securities totaling Dh365 million (USD 99 million), further bolstering its financial standing.

DSI's return to the DFM coincides with a period of optimism within Dubai's construction sector. The emirate is currently experiencing a construction boom, fueled by several upcoming mega-projects and a surge in real estate development. This positive outlook has instilled confidence in investors, who view DSI as a potential beneficiary of this growth.

The company's successful debt restructuring and its return to the stock market are viewed as positive indicators for DSI's future. With a streamlined financial structure and a buoyant construction sector, DSI is well-positioned to capitalize on upcoming opportunities and reclaim its position as a leading player in Dubai's construction industry.

Previous Article Next Article