(Adds more quotes, detail, context)
By Hadeel Al Sayegh, Tom Arnold and Saeed Azhar
DUBAI May 8 Loss-making Dubai contractor Drake
& Scull International said it expects to hear "very
soon" from Saudi Aramco about settling nearly half of
outstanding payments owed for its work on Riyadh's King Abdullah
Petroleum Studies and Research Centre.
Drake & Scull (DSI) has five claims outstanding with Aramco
totalling 2.3 billion riyals and hopes to soon
settle 1.05 billion riyals of them, DSI Group Chief Executive
Wael Allan told Reuters.
If the matter is not settled, Allan said DSI may consider
all legal options including arbitration to recover the remaining
amount for its work on the research centre (KAPSARC), which cost
$543 million to build and opened in 2016.
"All options are open," he said in an interview. "We feel
strongly that we are due some of these claims and we will pursue
them to the end."
DSI is struggling amid a depressed Gulf construction market
as governments have reined in spending on infrastructure due to
lower oil revenue. Allan said the company, which has put
non-core assets up for sale and is seeking to reschedule debt
repayments, cut its workforce by 7,000 over the past year to
Investors are fretting about its capital restructuring
On Sunday, DSI's shares slumped nearly 10 percent after it
said shareholders expressed no interest in a new share issue and
had approved increasing writeoffs by up to 722 million dirhams,
in addition to a previously planned capital reduction of 992
million dirhams, because of potentially unrecoverable
Its shares picked up on Monday, rising 2.5 percent to 0.409
Allan said DSI's total claims against companies, including
Aramco, stood at around 4 billion dirhams in terms of claims and
In the past three months the company has improved its
collection of payments significantly.
"Some of the existing have had a cash injection
in them which has enabled them to pay us and so actually in
terms of Saudi we have stabilised the business reasonably well,"
The issue of delayed payments in Saudi Arabia eased in the
final months of 2016 as the government disbursed about 100
billion riyals ($27 bln) in November and December, according to
statements by officials and central bank data.
Tabarak Investment, a Dubai-based investment firm which
currently does not hold any stock in DSI, agreed in February to
a 500 million-dirham capital increase via a new share issue at 1
dirham per share if the securities regulator approved the
further capital reduction by DSI.
The capital injection should be received by the middle of
2017, if the regulator's approval comes through, said Allan.
DSI appointed PricewaterhouseCoopers (PwC) in December to
assist with examining the company's capital structure and
financial liabilities and a five-year plan drafted with the help
of PwC has been sent to creditor banks.
DSI is in the final stages of negotiating the sale of its
Indian operations as part of plans to offload non-core assets.
($1 = 3.7502 riyals)
(Editing by William Maclean and Susan Fenton)