The board of Dubai-based construction giant Arabtec has agreed to proceed with plans to liquidate the company following a meeting.
In a filing to the Dubai Financial Market, the company said in a brief statement that the board “discussed all required resolutions and actions to proceed with the liquidation plan” on Thursday.
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The announcement comes nearly two weeks after shareholders had voted to discontinue with the company and dissolve it due to its untenable financial situation.
The resolution of the shareholders grants the Arabtec board a maximum period of two months to allow for discussions with the main stakeholders before a liquidation application may be submitted to the competent courts.
The impact of the liquidation of Arabtec will send “reverberations” throughout the industry, with the repercussions felt on a much wider scale than simply those who are directly involved with the company and its current pipeline of projects, analysts told Arabian Business at the time.
Mark Raymont, partner, construction advisory disputes at Pinsent Masons, said the twin shocks of the current coronavirus pandemic and depressed oil prices had already increased the stress on what was already a struggling industry.
Construction industry expert says repercussions will be felt on a much wider scale than simply those who are directly involved with the company
“Arabtec is a big name among contractors, one of the largest in the UAE. This is going to send reverberations through the market. There’s the obvious immediate impact. I’m sure all the projects they’re currently involved with, there’s going to be a long, hard look at the contracts taken by the owners and developers.
“I would certainly think that would be of immediate concern and the supply chain is obviously going to be very concerned as well, not just about whether they’re going to get paid, but the status of their own bonds and performance guarantees etc,” he said.
Arabtec Holding was valued at about AED30bn ($8.17bn) at its peak in 2014 and is now worth AED795m, with the stock down 60 percent this year alone.
Last week, Dubai’s Executive Council approved a new building code which seeks to reduce construction costs by streamlining building rules.