Drake & Scull International (DSI), a Dubai-listed contractor, resumed trading on the Dubai Financial Market (DFM) today after a suspension of over five years due to restructuring and losses dating back to 2015. The stock surged by 20% to Dh0.3 as of 11 am GST, with trading volumes reaching 81 million shares in the first five minutes, reflecting a 27% increase from its last traded price in November 2018.
“This step comes after the subscription process for the shares of Drake & Scull International PJSC, which began on April 25 and ended on May 10, has achieved a great success, as the proceeds of the increase in new capital exceeded Dh450 million, where the company was able to cover the minimum amount of targeted capital,” said Eng. Shafiq Abdelhamid, Chairman of the Board of Drake & Scull International. “This milestone will certainly contribute to completing the restructuring process, as well as working on the growth of Drake & Scull International business and its ability to commit to implementing its future business plan and financing its new projects in all its operating sectors.
“Additionally, the company intends to use the net proceeds from the capital increase to enhance working capital and capital expenditures and support operations, as well as future growth and any potential acquisitions”.
Last week’s planned return was delayed pending approvals. DSI proposed to return at a reference share price of Dh0.25 ($0.07) following DFM and the UAE’s Securities and Commodities Authority (SCA) approvals.
The company disclosed raising Dh454 million in a recent capital increase despite carrying accumulated losses of Dh5.5 billion as of March 31, 2024. It agreed with creditors to write off 90% of claims amounting to Dh3.4 billion, which will be registered as a gain in financial statements once written off. The remaining claims of Dh378 million will be offset by issuing a mandatory convertible sukuk (MCS) maturing in five years, which is expected to positively impact balance sheets.
DSI’s shares were suspended in November 2018 due to heavy financial losses. In 2022, the company completed its restructuring plan, achieving the required voting percentage from its 600-plus creditors for a consensual agreement. Despite a rise in revenue, DSI reported a higher net loss of Dh352.1 million in 2023, up from Dh224.3 million the previous year, with revenue increasing by 16% to Dh93.8 million. The company had Dh356 million worth of assets at the end of last year.
Funds from the Dh454 million capital raise are allocated as follows: Dh50 million to small creditors, Dh100 million to mandatory accounts payable, and Dh300 million to fund future operations and potential acquisitions to support growth.
