(This article was updated to include figures and notes from DSI's subsequently filed Q3 accounts)

Dubai-based Drake & Scull International (DSI) has brought in new advisors to lead a fresh restructuring exercise, as the contractor announced a third quarter loss of nearly half a billion dirhams.

The company said in a press release that Trussbridge Advisors (DIFC) has been appointed as financial advisors for the company's latest restructuring round, with Deloitte being brought in to advise on a new business plan.

Law firms Allen & Overy and Al Tamimi and Co have also been appointed to handle legal and regulatory aspects of its proposed restructuring respectively.

A four-person restructuring committee has also been formed, including group chief executive Yousef Al Mulla, who was appointed in August, and board members Khamis Buamim, Obaid Al Marri and Ahmed Kilani. Kilani is also CEO of DSI's major shareholder, Tabarak Investment.

DSI, which has been listed on the Dubai Financial Market (DFM) since 2008, also said in its statement that it has incurred a net loss of 498 million United Arab Emirates dirhams ($135.6 million) during the third quarter of the year, which it attributed to the close-out and handover of legacy projects. It added that other legacy projects that are due to be closed out "could lead to further potential losses in the fourth quarter".

DSI’s shareholders voted last month to allow the company to continue as a going concern after it racked up losses worth more than half of its share capital.

The company has been through a number of attempted restructurings in recent years, which included a capital restructuring exercise last year that led to three quarters of its share capital being written off to expunge 1.7 billion UAE dirhams worth of losses, ahead of a 500 million UAE dirham capital injection from Tabarak Investment.

The cash injection from Tabarak, which was completed in October last year, made the Abu Dhabi-based firm the majority investor in the company, but it has been unable to stem losses.

Third quarter accounts for the company filed on Wednesday show that the 498 million dirham loss for the third quarter has brought the company’s accumulated losses back up to over 1.1 billion dirhams at September 30 (31 December 2017: 430 million dirhams), meaning the company now has net liabilities of 401.4 million dirhams.

A note from auditors EY state that these conditions and other matters “indicate the existence of a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern”. However, notes to the accounts from the company’s management pointed to the subsequent vote by shareholders last month to allow the firm to continue operations, and a business plan to improve its cashflow. It also said the group “has support from (a) major shareholder by way of projects and issuance of corporate guarantees to the banks”.

In the statement issued on Wednesday, DSI said it was "pursuing ongoing measures to accelerate bidding and secure new projects and continues to submit proposals for carefully selected projects, predominantly in the UAE".

It also said that several new projects were due to be signed within the coming months.

Al Mulla described the appointment of a restructuring advisory team as "an important step as we move forward with our financial and operational restructuring plan".

"That team working with our newly formed Restructuring Committee, will not shy away from taking the tough decisions necessary to refocus the business and, with support from our many stakeholders, restore the company to financial health.”

(Writing by Michael Fahy; Editing by Shane McGinley)

Our Standards: The Thomson Reuters Trust Principles

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

© ZAWYA 2018