Dubai's Drake & Scull Gets Green Light for Market Return

Dubai-based contractor Drake & Scull International (DSI) is set to reclaim its spot on the Dubai Financial Market (DFM) after a lengthy hiatus. The company received approval to resume trading on Wednesday, May 28th, following a five-year suspension triggered by substantial financial losses.

The return to the DFM marks a significant milestone for DSI, which has undergone a comprehensive restructuring process since 2018. The company's struggles stemmed from mounting losses incurred over several years, culminating in a trading suspension in November 2018. DSI attributed these losses to various factors, including project delays and regional market challenges.

However, DSI's revival prospects brightened after the Dubai Courts approved a restructuring plan in 2023. This plan involved a significant debt write-off, allowing the company to shed a large portion of its financial burden. Additionally, DSI implemented a capital increase strategy, raising AED 300 million (approximately $82 million) to bolster its financial footing.

The company's return to the DFM is anticipated to occur at a reference share price of AED 0. 25 (roughly $0. 07). This price point reflects the restructuring efforts undertaken by DSI. Shareholders will have the opportunity to vote on the resumption of trading and the capital increase plan during a general assembly meeting held earlier in March 2024.

The capital injection garnered through the share offering will be directed towards various initiatives aimed at propelling DSI's future growth. A portion of the funds will be allocated to settling debts with creditors and mandatory accounts payable. The remaining capital will be earmarked for financing ongoing operations and potential acquisitions that align with the company's strategic expansion goals.

DSI's re-entry into the DFM is viewed as a positive development for Dubai's construction sector. The company's renewed presence on the market is likely to generate interest from investors seeking opportunities in Dubai's resurgent construction industry. DSI's successful return could also serve as a beacon of hope for other struggling companies seeking to navigate financial hardships through restructuring.

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