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Drake & Scull to issue sukuk for return to Dubai market

Dubai Financial Market, where trading in Drake & Scull shares was suspended in November 2018 Reuters//Christopher Pike
Dubai Financial Market, where trading in Drake & Scull shares was suspended in November 2018
  • Share trading halted in 2018
  • Net loss of $96m last year
  • Restructuring approved by court

The directors of Drake & Scull International are looking to recapitalise the troubled construction giant via a sukuk, with a view to resuming trading on the Dubai Financial Market.

A general assembly meeting will be held “as soon as possible” to increase the company’s share capital, which will be done through a mandatory convertible sukuk, according to a filing to the Dubai bourse.

No financial details were released.

Trading in Drake & Scull International shares has been suspended since November 2018, after the company announced losses that exceeded 75 percent of its capital.

Last November Dubai’s Court of Appeal approved a restructuring plan for the business.

During a lengthy legal battle, a lower court had ruled that the company should be placed into liquidation. This was overturned and Drake & Scull International was given one year to turn things around.

The restructuring, which was backed by creditors and shareholders in April last year under UAE bankruptcy law, agreed to write off 90 percent of the company’s debts. The remaining 10 percent will be changed into the sukuk.

Sukuk are sharia-compliant bonds that were developed as an alternative to conventional bonds, which are not considered permissible by many Muslims as they pay interest and may finance businesses involved in activities not allowed under Islamic law.

In its preliminary financial results for 2023, Drake & Scull International reported a net loss of AED352 million ($96 million), 57 percent worse than the AED224 million loss the previous year.

In August, the company revealed that it had filed lawsuits with claims equivalent to more than AED10.3 billion, including civil cases filed against the former management of the company and against advisory firms.

It has also filed criminal cases with claims of more than AED2.3 billion in Abu Dhabi and Dubai.

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