Drake & Scull International (DSI), a regional engineering and services leader, is racing ahead to secure approval from Securities and Commodities Authority (SCA) for initiating a 75 per cent share capital cut, said a company in a statement.

The share capital reduction programme will be on a pro-rata basis and apply to all DSI shareholders, it added.

The company has already got the shareholders' backing for the proposed capital restructuring programme which will see the company pursue a two-pronged strategy with additional capital reduction in the first phase and endorsement of a Dh500-million ($136 million) capital increase in the second phase.

The company is preparing to fulfil the regulatory requirements to initiate the share capital reduction and to subsequently effectuate the cancellation of 1.71 billion shares to extinguish its total accumulated losses attributed to the owners of the parent, said the statement from the Dubai contractor.

The capital restructuring programme is expected to be completed by the end of the third quarter, whereby Tabarak Investment will become the major strategic investor in the company, it added.

The latest developments represent a critical progress in the capital restructuring programme that will enable the company to resolve its liquidity challenges and execute its turnaround strategy to stabilise the business and pursue its growth objectives in the regional mechanical, electrical and plumbing (MEP) sector, said a senior official.  

"This is a major milestone in our turnaround strategy announced at the outset of the fiscal year 2017," remarked Feras Kalthoum, the acting chief financial officer.

"We are proceeding with the preparations at full speed to secure SCA’s approval and to initiate the share capital reduction to strengthen our balance sheet and to achieve the strategic objectives of our capital restructuring programme," noted Kalthoum.

"I am confident that by the end of the third quarter, we will complete our programme and we will generate substantial liquidity to reinvigorate our operations and most importantly to secure high-margin projects in the MEP sector mainly in our home market, the UAE," he added.-TradeArabia News Service