Arabtec Faces Uncertainty

Arabtec may struggle to meet the end of November deadline set by shareholders to formally submit liquidation plans to a court.

Creditors and banks awaiting details of Arabtec Holding’s liquidation face mounting uncertainty after talks to unwind the company stalled. Earlier reports suggested the United Arab Emirates based contractor appointed AlixPartners to work on a debt restructuring plan. But in an e-mail statement, the firm denied involvement in the liquidation process: “Please note we are not ap-pointed in the role described and will not be commenting as a result.”

Discussions over the dissolution of Arabtec were postponed on two occasions following a September 30 meeting of shareholders that voted to dissolve the company after it racked up first half losses of $200 million and reportedly amassed total liabilities of approximately $2.75 billion. The company’s shares listed on the Dubai Financial Market remain suspended following the meeting.

Arabtec may struggle to meet the end of November deadline set by shareholders to formally submit liquidation plans to a court. Doubts over the company’s intentions and potential impact on creditors and employees has gripped the UAE business sector reeling from the dual shock of low oil prices and the Covid-19 pandemic. According to the company’s website, Arabtec em-ploys over 45,000 people but it remains unclear which subsidiaries—if any—will survive the bankruptcy process.

The contractor’s dramatic fall from grace deals a heavy blow to the construction sector throug-hout the Gulf and undermines investor confidence according to analysts. Arabtec counted Abu Dhabi sovereign wealth fund Mubadala Investment Company among its high profile shareholders. Meanwhile, UAE lenders with an exposure face writedowns or a rescheduling of debts.

Banks in the UAE have been hit by a rise in non-performing loans that have damaged balance sheet quality and forced a retreat from construction sector lending. Arabtec’s demise follows a spate of corporate failures in the UAE. Recently Abu Dhab-based NMC collapsed with debts of $6.8 billion amid claims of fraud and mismanagement.