Arabtec CEO steps down as Aabar tightens grip on firm

Dubai co plans $1.31b rights issue

DUBAI, Feb 27, (RTRS): Dubai-based contractor Arabtec replaced its chief executive as part of a shakeup driven by Abu Dhabi state investment fund Aabar, its largest shareholder that is tightening its grip on the firm.

Arabtec, which built Dubai’s famous palm islands, also wants to raise $1.8 billion through a rights issue and convertible bond to finance growth, the company said in a statement on the emirate’s bourse on Wednesday.

Abu Dhabi is trying to revive its battered real estate industry by merging two of its largest developers Aldar Properties and Sorouh Real Estate and wants to tap into Arabtec’s track record of building high-profile projects.

Arabtec, the largest listed contractor in Dubai, already has contracts in its oil-rich neighbour including a $2.9 billion project to build a new airport terminal.

Active

The company said on Wednesday that founder and chief executive, Riad Kamal, resigned and was replaced by Hasan Ismaik, an active Abu Dhabibased private investor who was made a board member last August.

Aabar, which owns 22 percent of Arabtec and stakes in companies such as commodities trader Glencore and Italian bank UniCredit, has been exerting its influence since it started buying shares last year.

It replaced four Arabtec board members with its own candidates and named its chairman, Kadem Abdulla alQubaisi, as Arabtec’s chairman.

“The resignation of the CEO Riad Kamal is surprising and just gives a clear indication that Aabar is calling the shots now,” said a regional real estate analyst, who did not want to be identified.

The company said it is looking to hire a senior management team, including a finance chief and an operations head.

Arabtec’s current chief financial officer is Ziad Makhzoumi. The company did not say whether he was still working there.

The analyst said he expected Aabar to buy its share of Arabtec’s convertible bonds, which would enable it to increase its stake in the future when the debt converts to equity.

Aabar’s $1.7 billion attempt to buy 70 percent of Arabtec in 2009 failed.

Arabtec plans to raise 4.8 billion dirhams capital through a rights issue and 1.7 billion dirhams via the convertible bond.

The company will issue 3.2 billion shares at 1.5 dirhams per share, a near 50 percent discount to its current market price. The capital hike amounts to a near-40 percent increase in its market capitalisation.

“The capital increase is a surprise — most probably they are looking at external growth, financing acquisitions,” said Sebastien Henin, portfolio manager at investment firm The National Investor.

“Since Arabtec has new shareholders, maybe they want to implement their strategies through a different CEO.”

Arabtec said 2012 net profit fell to 139.2 million dirhams from 221.1 million dirhams a year ago. It did not provide quarterly figures.

The firm also said its has agreed with Dubai’s Meydan to reach an out-ofcourt settlement for all outstanding claims, after four years of a legal dispute.

Malaysian engineering firm WCT and Arabtec won a $1.3 billion joint venture contract to build a racecourse for Meydan in 2008.