Arabtec that built Burj Khalifa earthquake in the Emirates

The decision of the general assembly of the largest contracting company in the UAE, “Arabtec”, to dissolve the company and submit a request to the competent court to declare its bankruptcy and liquidation, triggered a violent shock in the financial and investment circles in the Emirates.

Amidst a state of controversy on social networking sites monitored by “Arabi 21” regarding the interpretation of the decision of the general assembly of “Arabtec”, analysts and investors in the UAE expressed their fears that the shake-up of “Arabtec” would extend to other companies, which may meet the same fate.

They said that Arabtec is linked to a wide network of suppliers and companies that have obligations with banks. And the real estate sector in the UAE in particular, and a greater and broader emotional impact on the UAE economy.

Arabtec’s general assembly decided to authorize the board of directors to apply to the competent court to request the company’s dissolution, liquidation and declaration of bankruptcy, after billions of losses exceeding the value of the company’s capital, which amounts to 1.5 billion dirhams, according to the CEO of customer strategies at Al Dhabi Capital in Abu Dhabi, Muhammad Ali Yassin .

Yassin said in an interview with “Forbes” that he attended the general assembly of the company that was held on Wednesday and had three options to vote on them: liquidating the company now, or liquidating the company after waiting two months, or the company to continue as it needs 3.7 billion or 5.3 billion dirhams ( This means that the company’s management does not have an accurate assessment of what is required of the company in order to continue its activities, and that this option is only put in place to make an argument on the shareholders).

He wondered: How can shareholders’ rights in the company become negative about 1.6 billion dirhams, and the company asks them for 3.7 billion or 5.3 billion dirhams without even having a clear plan for how to manage the funds to be injected? He added, “This means that it is an unreal fictitious choice, to take the liquidation decision now or after two months, and the shareholders chose to liquidate after two months.”

Yassin explained that the rights of shareholders according to the budget for the first half of the year 2020 amounted to minus 350 million dirhams (meaning that the shareholders lost their rights and they are required to pay 350 million dirhams), according to the company’s accounts.

He continued: “This amount required from shareholders may increase to more than the value of the company’s capital of one and a half billion dirhams if the calculations are made in accordance with international accounting standards, and this means that Arabtec is not only on the verge of bankruptcy or even has lost 97 percent of the company’s capital as promoted. Some shareholders have even become negative (they have debts). ”

Yassin indicated that during the last three years, Arabtec has been achieving continuous losses as a result of previous projects that were taken at lower prices than the cost, which resulted in losses in implementation, and this in turn led to the accumulation and increase of losses.

The CEO of Customer Strategies at Al Dhabi Capital Company in Abu Dhabi said that the company has liabilities to suppliers and dealers with up to 6.6 billion dirhams, and it also has bank obligations in the range of 10 billion dirhams (total liabilities and obligations of $ 4.5 billion), and these amounts are very frightening.

Immediately after announcing the decision of the general assembly of “Arabtec”, a state of controversy prevailed on social media in the Emirates, related to a clear discrepancy between investors and analysts in the interpretation of the association’s decision. While some considered it an irreversible decision to declare bankruptcy and dissolve and liquidate the company, others interpreted it on It is a maneuver by the company to correct its financial position.

Source: Arabic 21