* PwC to advise on capital structure and financial
* DSI owed at least 1.72 bln dhs - Q3 results
* Debt restructuring plan possible - sources
(Adds detail from sources, context)
By Tom Arnold and Hadeel Al Sayegh
DUBAI, Dec 8 PricewaterhouseCoopers (PwC) has
been appointed as strategic adviser to Drake & Scull
International (DSI) in a move sources said could lead
to a range of options for the Dubai-based contractor including
bringing in a minority investor or a debt restructuring.
DSI's board approved the choice of the consultancy firm as
strategic and financial adviser to assist with "examining the
company's capital structure and financial liabilities", DSI said
in a bourse filing.
The company has been battling a depressed Gulf construction
market, as governments rein in spending on infrastructure
schemes after oil prices declined, reporting worsening earnings
in nine of the last 11 quarters.
DSI announced last month it was reviewing its business to
address market challenges which could lead to a withdrawal from
non-core markets, retrenching on civil works in Saudi Arabia and
a more conservative stance on recovering certain receivables.
Sources familiar with the matter told Reuters PwC's remit
could include a debt restructuring, with the possibility that a
plan could be put to creditor banks as soon as early next year.
A note attached to DSI's third-quarter financial statement
from PwC, which also audits the firm, warned that if the company
failed to generate sufficient cash flow within the next year, it
may not be able to meet upcoming obligations.
The sources said the company had also held talks with the
Emirates Securities Authority about issuing mandatory
convertible bonds, but any such issue could prove tricky because
the company's share price was below the 1 dirham par value,
their nominal value for accounting purposes.
DSI shares were down 1.2 percent as of 1156 GMT at 0.51
dirhams ($0.14), against a 1.8 percent rise in the wider Dubai
Another option involves attempting to bring in a strategic
minority investor, the sources said.
DSI declined to comment.
Like other contractors, DSI has been hurt by delayed
payments for projects, particularly in Saudi Arabia.
The company is owed an unknown amount from Saudi Aramco
for the King Abdullah Petroleum Studies and
Research Center, a $543 million project in Riyadh. The company
remains in negotiations with the state oil giant about the
outstanding payment, the sources said.
Aramco was not immediately available to comment.
DSI was owed 1.16 billion dirhams from "unapproved change
orders" relating to three contracts, as well as a further 564
million dirhams due from customers on contracts under discussion
and negotiation, according to its third-quarter financial
($1 = 3.6729 UAE dirham)
(Additional Reporting by David French in Dubai and Reem
Shamseddine in Khobar; Editing by Andrew Torchia and Adrian