UAE Construction Giant Arabtec Reportedly To Be Placed Into Liquidation

UAE-based Arabtec Holding is to be placed into liquidation against a backdrop of "adverse market conditions".

The decision was made at the annual general meeting on Wednesday and comes after the group posted a net loss of $216m for the first six months of the year. 

On Thursday, shares in Arabtec on Dubai Financial Market remained suspended.

In an email sent to employees, seen by Arabian Business, it said: “Unfortunately, against a backdrop of adverse market conditions, we regret to inform you that Arabtec shareholders voted to adopt a plan of liquidation and dissolution due to the company’s untenable financial situation.”

Arabtec successfully completed more than 240 projects, including the world’s tallest building, the Burj Khalifa in Dubai, and the iconic Louvre, Abu Dhabi.

Arabtec to call EGM as company posts H1 losses of $216m

Losses attributed to Arabtec Construction arm as revenue drops $323m for six-month period

The company was in the process of appointing an advisory firm to assist with capital and debt restructuring.

It comes after Arabtec reported a AED774m ($211m) loss for 2019, a substantial drop from the AED256m ($70m) profit announced in 2018.

In September last year Arabtec Holding announced to Dubai Financial Market that it was in talks with Abu-Dhabi-based Trojan Holding over a possible merger of its construction business.

Boyd Merrett resigned as chief executive officer of Arabtec Construction in October last year. Merrett had been in the position since July 2017 and was replaced “until further notice” by Wail Farsakh, the former general manager of Dutco Balfour Beatty, who was only appointed group chief operating officer in September 2019.

Waleed Ahmed Al Mokarrab Al Muhairi was appointed as the new chairman of Arabtec in July, replacing Mohammed Thani Murshed Al Rumaithi, who resigned from the role.

Editor of Construction Week, Ashley Williams, told Arabian Business: “For many years, Arabtec Holding has faced dark times with its financial outlook, and even after hiring a new group CEO earlier this year to re-structure the business, there has been little progression made.”

A major developer, #Arabtec has announced it is going into liquidation. Clearly, deteriorating economic conditions, property oversupply and weak growth prospects contributed to its demise, along with management and corporate governance lapses. pic.twitter.com/Pl4gk0vuvp— Nasser Saidi (@Nasser_Saidi) September 30, 2020

Nasser Saidi, the former chief economist at Dubai International Financial Centre (DIFC), tweeted after the news broke: "A major developer, #Arabtec has announced it is going into liquidation. Clearly, deteriorating economic conditions, property oversupply and weak growth prospects contributed to its demise, along with management and corporate governance lapses."

In July, a unit of Dubai’s Arabtec Holding was awarded a SAR200m ($54m) contract by Saudi Aramco to replace five storage tanks at Ras Tanura Refinery in Eastern Province, Saudi Arabia. The contract, awarded to Target Engineering Construction Company, included the replacement of three naphtha storage tanks and two slop oil storage tanks.

Arabtec isn't the only UAE-based contracting major to experience problems this year.

Last month, Drake & Scull International said it had appointed a new CEO and CFO, the latest in a string of senior job announcements as the company proceeds with finalising an organisational and financial reorganisation plan.

According to the statement to the Dubai Financial Market earlier this month, an application for its financial reorganisation process to be conducted under the supervision of the Financial Reorganisation Committee (FRC) – a body set up in 2018 under the UAE’s bankruptcy law – was accepted in May.

Further to the appointment of Aaronite Partners as the FRC expert, DSI has formally initiated a process to allow all relevant creditors to register claims with them.