Dubai-based Drake & Scull International â€˜in breachâ€™ of Sukuk covenants
Drake & Scull International (DSI) has breached the covenant terms of its Sukuk and other loans. The news comes in the notes to the company’s accounts published today, 30 March, by the Dubai Financial Market.
In 2016, DSI reported a loss of AED815.3 million and showed net current liabilities exceeding current assets and a negative cash position. In addition, the firm is in breach of its financial covenants in relation to the syndicated Sukuk facility and other borrowing facilities.
DSI had an agreement in place with lenders for a conditional waiver up to 31 December 2016. However, the firm admitted that it had been unable to comply with certain reporting requirements stipulated by the lender.
Breaching the facilities’ covenants has rendered the loans technically payable on demand. DSI is also facing overdue principal and interest payments on related bank borrowings.
The Board has been working since mid-February on a recapitalisation programme and has secured a binding offer from UAE-based Tabarak Investment to inject new capital of AED 500 million into the group. The recapitalization is subject to both shareholders’ and regulatory approvals.