Dubai's DSI expects to have AED 1 bln for debt payments: Report

Dubai-based contractor Drake & Scull International (DSI) expects that it will have approximately AED 1 billion ($272 million) of cash flow available over the next four years to partly repay its debt, Reuters reported citing banking sources.

The Dubai-listed builder, which reported attributable net loss of AED 722 million in Q1 2017, sent non-disclosure agreements to its lenders in April, ahead of planned meetings to discuss rescheduling payments on existing debt and seek support for its 2017-2021 business plan.

According to DSI estimates, it will have AED 956 million of cash flow available for debt service (CFADS) over the next four years, which will be used to partly repay AED 2.6 billion of funded debt and AED 699 million of interest costs, the sources said.

Funded debt can be bonds, long-term notes payables or debentures that will mature in more than one year.

One of the creditors, who is familiar with DSI's plan, said that the company should have provided more details on its plans to reduce debt.

"There was very little comfort for lenders," the creditor was quoted as saying. "It would have been nice to have some information on its debt repayment plan and its debt reduction plan.”

"With a five year-plan it's very difficult to be accurate as a lot of it is dependent on economic conditions," the creditor added.

DSI also estimates its earnings before interest, taxes, depreciation and amortization this year to be AED 64 million, improving from a negative figure of AED 566 million last year, the report said citing sources.

The company expects revenues of AED 17.48 billion over the next four years, mostly from current backlog, expected project wins in 2017 and improved market conditions driven by Dubai's Expo 2020 and the 2022 FIFA World Cup in Qatar, the sources said.

In February, the contracting firm had announced a capital restructuring plan that included cost-cutting measures and capital raising plans.

DSI said it was also planning to propose a rights issue of AED 500 million in equity to a strategic investor, and that it had secured a binding offer from United Arab Emirates-based Tabarak Investment.

Shareholders this month approved a 75 percent reduction of Drake & Scull's paid-up share capital. A 50 percent reduction was one of the conditions for investment from Tabarak.