Drake & Scull: court-approved 90% debt write-off returned the Dubai contractor to profit

Drake & Scull International, the Dubai-listed engineering and contracting group, broke in 2015 when lower oil prices pushed developers to defer payments and delay projects across the Gulf. Losses piled up on cost overruns at non-performing subsidiaries: the first half of 2018 alone produced a net loss of AED183m ($49.8m). Management churned — three group CEOs in under a year — and in October 2018 shareholders had to vote on whether to dissolve the company. They chose restructuring, and the shares were suspended on DFM for what became more than five years.

The turnaround ran through the courts. Under the UAE's Bankruptcy Law, DSI put its debts to a court-supervised restructuring, and in March 2024 the Dubai Courts accepted a plan that wrote off 90 per cent of the company's debt. The Dubai Financial Market and the Securities and Commodities Authority then approved reinstatement of the shares, conditional on a recapitalisation.

The equity raise worked. A subscription that ran from April 25 to May 10, 2024 brought in proceeds exceeding Dh450m, covering the minimum of the targeted Dh600m capital increase, earmarked for working capital, capex and growth including acquisitions. Trading resumed on May 29, 2024. Chairman Shafiq Abdelhamid framed the relisting as the completion of restructuring and the start of the growth plan.

The accounts show what the write-off bought. Reported 2024 net profit was Dh3.76bn, but Dh3.79bn of that was the one-off gain from extinguishing the debt. The real test came in 2025: revenue more than doubled to Dh223.8m, up 116 per cent, and the group earned a normalised Dh47m net profit, with roughly Dh410m of new awards and an 83 per cent turnover jump in its Passavant water and wastewater unit backing the recovery.

The court plan wrote off 90% of debt; Dh450m of new equity was subscribed in 2024; 2024 booked a Dh3.79bn restructuring gain and 2025 delivered a normalised Dh47m profit.

The losses were a payment-collection problem, not a demand problem, so preserving the operating platform through insolvency was worth more than liquidation.

Shareholders voted against dissolution in October 2018, buying time for a legal route that only later existed in usable form under the UAE Bankruptcy Law.

The court-sanctioned 90% write-off concentrated the pain in 2024's one-off accounts instead of bleeding it over years, letting the 2025 numbers show an operating business.

Relisting was tied to fresh money: regulators approved reinstatement only alongside the Dh600m capital increase, so old shareholders got a trading venue and creditors a recapitalised counterparty.

When losses come from clients who will not pay, dissolution destroys more value than creditors recover. A court-supervised write-down that keeps operations and licences intact buys a second life.

DSI re-entered the market as a smaller but functioning contractor: 2025 revenue of Dh223.8m still far below its boom-era scale, but profitable, bid-winning (about Dh410m of new awards in 2025) and expanding its water and wastewater arm. Courts separately pursued former executives — in January 2025 a Dubai court ordered the ex-CEO and another former official to pay Dh152m in compensation — closing the accountability chapter that began with arrests in 2020.