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, sparked a violent shock and economic earthquake in the financial and investment circles in the Emirates.
Amidst a case 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, which may result in the crisis rolling like a snowball to affect a number of companies and banks associated with the UAE Contracting Company, stressing that the bankruptcy of Arabtec will have negative repercussions directly on the contracting market. And the real estate sector in the UAE in particular, and a greater and wider 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 to continue its activities, and that this option is only put in place to make an argument for the shareholders.)
He asked: How do shareholders have their rights in the company 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 required to be injected? Adding: "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 negative 350 million dirhams (meaning that the shareholders lost their rights and 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 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.
To Advertise Here Contact us