Economic earthquake in the UAE after “Arabtec bankruptcy” …

The decision of the General Authority 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 United Arab Emirates. UAE.

Amidst a state of controversy on social networking sites monitored by “Arabi 21” regarding the interpretation of the general assembly decision of “Arabtec”, analysts and investors in the UAE expressed their concerns about the extension of the “Arabtec” shake-up. To other companies, which may face the same fate.

They said that Arabtec is linked to a wide network of suppliers and companies that have obligations with banks. The real estate sector in the UAE in particular is having 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 in losses exceeding the company’s capital, which amounted to 1.5 billion dirhams, according to Abu Dhabi Capital’s CEO of Customer Strategies Mohamed Ali Yassin.

Yassin said in an interview with Forbes that he attended the company’s general assembly that took place on Wednesday and had three options to vote on: liquidating the company now, liquidating the company after waiting two months, or liquidating the company. Tawasul as it needs 3.7 billion dirhams 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 applicable to present an argument. To the shareholders).

Also read: UAE stocks decline after the shock of Arabtec bankruptcy … and losses in Riyadh

He wondered: How can the equity of the shareholders in the company become negative by 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 money that will be pumped? He added, “This means that it is an unrealistic 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 shareholders ’equity according to the budget for the first half of the year 2020 amounted to 350 million dirhams (meaning that the shareholders lost their rights and must 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 about to go bankrupt or even lose 97 percent of the company’s capital as has been done. Promote it. Some shareholders even became negative (have debts). ”

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

Also read: The largest contracting company in the United Arab Emirates announces bankruptcy and decides to liquidate its business. Total liabilities and liabilities are $ 4.5 billion), and these amounts are very frightening.

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

Warren Buffett (@ DXB_AUH)

Whoever is asking about your aptitude, wait for the official disclosure, as well as the explanation or detail on the matter, until you see the decision clearly.: After the decision is made and clarified, there will be even a small part of the possibility to analyze and connect some points to reach some conclusions.

– Emirati Warren Buffett (@DXB_AUH) September 30, 2020

Emirates shares fell at the end of Thursday’s trading, after the shock of the announcement of the general assembly decision of the Emirati contracting company “Arabtec” to declare the company bankrupt and liquidate its activities after cumulative losses that exceeded the value of the company. Capital.

The Dubai index fell 0.3 percent, due to a 1.4 percent decline in Emirates NBD. Trading is still pending on Arabtec Holding, which lost 59 percent of its market value this year, before a meeting of the company’s shareholders.

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