Oman banks disclose indirect exposure to embattled firm

Local Omani bank Sohar International has revealed that it has exposure to the tune of RO 6.5 million to the Omani joint venture partner of Drake & Scull International (DSI), a UAE-based construction services firm that it is currently being restructured after running up losses estimated at over $1.3 billion.

The lender is the second publicly listed Omani firm to have so far disclosed exposure, albeit indirect, to DSI.

It follows a circular issued by the Capital Market Authority (CMA) requiring all banks and financing companies listed on the Muscat Securities Market (MSM) to share details of any exposure — direct or indirect — to the embattled construction firm.

In its filing, Sohar International stated it has already made 100 per cent provision for its exposure to the Omani JV partner of DSI.

The latter, it noted, had “unconditionally and irrevocably” guaranteed the RO 6.50 million outstanding as sponsor of the Omani JV.

Ahmed al Musalmi, CEO, Sohar International, also stated that the lender is considering “all options and measures” to recover its exposure to the Omani JV.

Earlier, on Monday, Ahli Bank announced that it has similar exposure to the Omani JV partner of DSI amounting to RO 4.4 million.

The loan was sanctioned to help fund Omani projects, the lender said, adding that it has made adequate provisions to cover the exposure.

Last month, Dubai-based DSI said it had completed the first phase of a debt restructuring plan sought by creditors. It also claimed that, despite its current financial troubles, it continues to implement a healthy order-book of construction contracts around the UAE.

Earlier, in a filing to the Dubai Financial Market, DSI had asked creditors to register proof of their claims with officials appointed by local authorities.

DSI, once a leading provider of engineering and construction services in the region, attributed its financial losses and accumulating debt to the economic downturn, as well as rising debt servicing costs.

According to its website, DSI‘s main business streams include engineering (Mechanical, Electrical and Plumbing), construction, oil and gas, and water and wastewater. The company operates across the GCC and the rest of the Middle East as well as Europe.