DUBAI More creditors of Dubai technology company Pacific Controls are pursuing court action against the company as they seek to recoup some of the 1.4 billion dirhams ($381 million) they're owed, banking sources said.
The company, which has served clients including telecoms firm Etisalat and Dubai Civil Defence, has been struggling since last year as cashflow has dwindled. Several of the roughly 19 banks that have exposure to the company have now asked for court consent to seize its data centre in Dubai and other assets, the sources said.
Pacific Controls did not respond to an emailed request for comment and staff answering the phone at the firm directed requests for comment to be sent by email to Chief Executive Sanjay Nayak. Nayak did not respond to an emailed request for comment.
The data centre acts as security against a syndicated loan the company has been unable to make payments on, while other assets the firm holds are security against bilateral debt the firm has not been able to meet, the sources said.
Pacific Controls is one of many Gulf companies that are floundering as more than two years of low oil prices drag down economic growth and business activity, leaving banks with a rising number of bad loans.
Mashreq, National Bank of Fujairah, Dubai Islamic Bank, Ajman Bank, United Arab Bank and Noor Bank are among the lenders pursuing legal action against Pacific Controls via the Dubai civil courts, the sources said. They join Emirates NBD, which is already pursuing legal action.
Dubai Islamic Bank, Mashreq and United Arab Bank declined to comment, while the other banks did not respond to requests for comment.
Banks hope to sell the data centre to telecommunications firm Etisalat, which is a currently using it as a customer.
Pacific Controls built the data centre in 2011 with an investment of $85 million in order to manage data services for building control and automation. More recently, the privately-owned firm has branched out into cloud computing and the internet of things.
Bankers hope a sale will allow them to recover at least part of the outstanding amount they're owed, although several banks have taken provisions against their exposure, the sources said.
Creditors' optimism about a turnaround of the firm has soured in recent months as the company's founder and executive chairman and former chief executive Dilip Rahulan remains overseas, having left for the United States last summer for surgery, the sources said.
Staff answering the company's office confirmed his absence and said there was no information on his return. They declined to provide Rahulan's contact details, instead directing enquiries about the firm to Nayak, who was appointed chief executive after Rahulan's departure overseas.
KPMG, which was hired last year to advise on a potential restructuring of the company's debt, has stopped working on the matter because of non-payment of its fees, a source with direct knowledge of the situation said.
(Editing by Susan Thomas)