Arabtec has announced a Dh1.5 billion rights issue in an attempt to pull the beleaguered Burj Khalifa builder out of the red after the company announced widening annual losses on Monday morning.In a statement to the Dubai Financial Market Arabtec said it was planning its second offering in three years alongside a capital reduction programme which would reduce the company’s share capital to lower balance sheet losses.Arabtec said the move, which has been fully underwritten by its biggest shareholder, Abu Dhabi owned Aabar Investments, was “to secure the group’s sustainable and successful future”.The company plans to hold an Annual General Assembly of shareholders in April to provide details of the proposal and win approval for it.Arabtec posted a net loss of Dh3.5bn last year compared with a net loss of Dh2.8bn in 2015. The company said that the losses came as a result of “impairment charges on high risk items as well as recurring, non-recurring and operational expenses”.The news sent the company’s shares tumbling in early trading. Arabtec fell 9.85 per cent as the DFM opened this morning, tumbling to Dh1.19.The losses came in above analysts’ expectations. According to Bloomberg, a poll of six analysts had forecast that full year losses would come in at an average of Dh579 million. The company said its financial performance was a “reflection of the adverse market conditions which are having a negative impact on the construction industry throughout the GCC”.The company reported a 5.6 per cent increase in revenues to Dh7.7bn from Dh7.3bn a year earlier.Arabtec said it would announce its audited financial statements next month.Arabtec chairman Mohamed Thani Al Rumaithi said: “Our board is taking confident, sensible steps to underpin the company’s capital structure as we look ahead to a robust pipeline of business in the years ahead. Aabar Investment’s commitment to the rights offering represents a strong vote of confidence from our largest shareholder in the long term future of Arabtec.”The news comes on the back of eight successive quarterly losses as the company struggled to cut huge costs acquired during a rapid expansion two years earlier.After two and a half years of cost cutting and restructuring, some analysts had been forecasting that the company would make a profit at gross operating level from the third quarter 2016.Arabtec expanded rapidly between 2012 and 2014 during the tenure of the company’s former chief executive Hasan Ismaik.After an investment by Abu Dhabi government owned fund Aabar, the company announced an ambitious list of projects around the world amid plans to propel itself to becoming one of the world’s 10 biggest builders – an exponential jump from its global ranking of 187 in 2012.In 2014, the company completed a Dh2.4 billion rights issue to raise money for its rapid expansion.But in mid 2014 when Mr Ismaik left the company, Arabtec shares plummeted forcing the company to get rid of hundreds of staff including most of its senior executives.In November Arabtec appointed Depa chief executive Hamish Tyrwhitt as its new CEO as the company attempted to signal that it had turned a corner.lbarnard@thenational.aeFollow The National’s Business section on Twitter
Source : thenational.ae
Read more…Arabtec in Dh1.5bn rights issue as full year losses widen
