Arabtec appoints advisers as it prepares to sell two units amid liquidation crisis

Arabtec plans to sell two subsidiaries, Target Engineering and Arabtec Engineering Services, as it faces liquidation.

The move will help to protect “the value of liquidation assets in the interest of all of its creditors”, the contractor said in a filing to the Dubai Financial Market yesterday.

The company’s board was authorised by shareholders in September to file for liquidation due to an untenable financial position.

“In the event a sale of any of the company’s subsidiaries or their assets is agreed, any such sale will be subject to the approvals and ratifications as may be required under applicable UAE laws,” the contractor said.

Arabtec appointed corporate advisory company deNovo to advise on the potential sale of Target while Lumina Capital will advise on the sale of AES.

The company also has other subsidiaries such as Gulf Steel Industries, Emirates Falcon Electromechanical company, Austrian Arabian Readymix Concrete company and Arabtec Precast.

Arabtec, which began its operations in 1975, has built some well- known projects such as the Louvre Abu Dhabi and the Burj Khalifa in Dubai.

It reported a net loss of Dh788 million ($214.5m) in the first half of last year as revenue fell by 28 per cent to Dh3.02 billion.

As of June 30, it owed about Dh1.8bn to banks and more than Dh5.3bn to trade creditors. It had total liabilities worth Dh10.14bn and assets worth Dh9.79bn, according to its half-year financial statement.

“In recent years, limited liquidity in the construction sector has [affected] the progress of Arabtec’s projects and this has been exacerbated by the effects of Covid- 19,” chairman Waleed Al Muhairi said in October.

“Despite efforts to pursue legal and commercial entitlements and a restructuring of the company’s finances and operations, the situation in which Arabtec finds itself today is untenable.”

Construction companies in the UAE have faced headwinds as the property market slowed after a three-year oil price decline that began in 2014.

The coronavirus pandemic further compounded the problem as work was slowed at some sites to maintain social distancing and new projects were delayed or cancelled.