Dubai's troubled engineering firm Drake & Scull International (DSI) is inching closer to a potential comeback on the Dubai Financial Market (DFM) after a six-year absence. The company, once a regional leader in the construction sector, has been battling financial difficulties since 2018, leading to its suspension from trading in 2019. However, recent developments suggest a potential turnaround story might be unfolding.
A key step towards DSI's return came in late 2023 when the company secured a crucial court verdict. The Court of Cassation, Dubai's highest court, prevented the company from entering liquidation, granting DSI a lifeline to pursue its restructuring plans. This decision followed a detailed roadmap presented by DSI management outlining a path towards financial recovery.
The restructuring plan hinges on addressing DSI's significant debt burden. The company has proposed writing off 90% of its existing debt and converting the remaining 10% into a mandatory convertible sukuk, an Islamic financial instrument similar to a bond. This significant debt reduction aims to create a more manageable financial landscape for DSI.
DSI has also taken steps to improve its operational efficiency. The company claims to have reduced its costs by 30% and secured a new order book worth AED 410 million (approximately USD 112 million) across the UAE and overseas markets. Additionally, DSI filed a lawsuit against global consultancy firm PwC in May 2023, alleging a "black hole" in the company's accounts amounting to AED 5.5 billion (approximately USD 1.5 billion).
Despite these positive developments, challenges remain for DSI. The company still needs to obtain court approval for its restructuring plan, a process that has already taken over a year. Additionally, regaining investor confidence after years of financial turmoil will be crucial for DSI's successful return to the DFM.
The potential return of DSI to the DFM would be a significant development for the Dubai market. The company's comeback story could serve as a beacon of hope for other struggling businesses and potentially attract new investments to the region. However, the road to recovery remains uncertain, and DSI will need to navigate its remaining challenges effectively to secure its long-term future.