Arabtec chief eyes growth with capital raise; shares slump
Shareholders approve Aldar-sorouh merger
DUBAI, March 3, (RTRS): Dubai builder Arabtec, which underwent a major management shakeup last week, said it will rely on the reputation of its biggest shareholder and proceeds from a planned $1.8 billion capital raise to grow its business.
The assurances from its newlyappointed chief executive comes amid a plunge in its share price over worries of dilution and larger control for Abu Dhabi state investment fund Aabar, which already has a 22-percent stake in the company.
Arabtec replaced its founder and Chief Executive Riad Kamal last week with Abu Dhabi-based private investor Hasan Abdullah Ismaik. It also revealed plans to raise $1.8 billion through a rights issue and convertible bond to finance growth.
Its shares plunged 9.8 percent on Thursday, a day after the announcement. The drop continued on Sunday with shares of the builder falling another 9.7 percent at 0645 GMT to a two-month low.
“Arabtec intends to expand through organic growth, acquisitions and the formation of world class joint ventures,” Ismaik said in an email response to questions, denying any plans to delist.
“The reason why the board has chosen a rights issue to fund the new strategy is that it enables shareholders to participate in the company’s future growth.”
The rights issue was set on Wednesday at a near 50-percent discount to the com- pany’s then market price.
The comments are Ismaik’s first after taking charge of the company. Ismaik, a Jordanian businessman based in Abu Dhabi, is also chairman of German football club TSV 1860 Munchen.
Arabtec’s backlog, including 2013 contract awards, stands at nearly 22 billion. Ismaik said the firm has a clear visibility on its future earnings and it’s strategy is to grow the company’s operations in Saudi, Kuwait, Qatar, Oman and UAE.
Arabtec said last week that 2012 net profit fell to 139.2 million dirhams ($37.90 million) from 221.1 million dirhams a year ago.
The new chief also said Aabar has not sought to increase its 22-percent stake.
“Aabar’s stake is supportive to Arabtec but they have not applied for an increase of their stake,” Ismaik said in comments to Abu Dhabi TV, which were quoted on state news agency WAM.
Aabar, which owns stakes in companies such as commodities trader Glencore and Italian bank UniCredit, has been exerting its influence on Arabtec since it started buying shares last year.
Ismaik was also quoted saying Arabtec wants to preserve its liquidity and does not want to borrow more and increase its debt.
The firm had said it has agreed with Dubai’s Meydan to reach an out-of-court settlement for all outstanding claims, after four years of a legal dispute.
“Arabtec is looking to agree the settlement that is due to them. The discussions have only just started,” said Ismaik.
Malaysian engineering firm WCT and Arabtec won a $1.3 billion joint venture contract to build a racecourse for Meydan in 2008.
Also: ABU DHABI: Shareholders of Abu Dhabi’s Aldar Properties and Sorouh Real Estate on Sunday approved plans to merge, creating a real estate entity with assets of about $13 billion.
The boards of the state-linked rivals proposed a merger in January and the deal was expected to be completed by end-June.
More than 50 percent of the shareholders at both firm’s meetings backed the tieup. Approval was expected as the deal was supported by the Abu Dhabi government.
Both firms will now apply to the UAE Ministry of Economy to approve the merger and initiate other steps including dissolving Sorouh and increasing in the share capital of Aldar, the companies said in a joint statement.
Sorouh’s shares would be delisted from the Abu Dhabi bourse.
Mohamed Al Mubarak was named the deputy chief executive and chief portfolio officer of the new entity. Greg Fewer will be chief finance officer.