Improved cash situation for Dubai contractor giant may have eliminated need to sell 70% stake
A deal that would have seen Abu Dhabi take a controlling stake in giant Dubai contractor Arabtec has been cancelled at the last minute. Under the $1.74bn deal Abu Dhabi state-linked investment fund Aabar would have bought a 70% stake in Arabtec, which worked on Dubai’s Burj Khalifa, the world’s tallest building.
The deal was announced in January amid cash flow problems at Arabtec due to stalled projects and non-payment from UAE developers. In February, Building reported that the contractor had downed tools on £400m scheme for state-owned developer Nakheel, alleging overdue payment.
Although no reason was given for the deal’s cancelation, Nakheel’s parent Dubai World’s $9.5bn debt restructuring programme, announced in March, is thought to have improved Arabtec’s cash situation, eliminating the need for the capital injection from Aabar. Arabtec’s shares surged to a three-month high following the announcement.
Aabar said in a statement to the Dubai and Abu Dhabi stock exchanges: “The parties have agreed that they will no longer pursue the original transaction and will terminate the acquisition documents, effective 14 April 2010. The parties have agreed that they will continue to work together in good faith towards future cooperation and forming a strategic partnership in Abu Dhabi in the future.”