Dec. 30 (Bloomberg) -- Arabtec Holding Co. fell to a one-month low after Qatar Airways said it’s filing a legal claim against a joint venture of Depa Ltd., which is partly owned by the United Arab Emirates construction company.
The shares tumbled as much as 4.9 percent to 2.14 dirhams before closing at 2.24 dirhams in Dubai, the lowest level since Nov. 28. Arabtec was the second-biggest decliner on the benchmark DFM General Index, which gained 1.1 percent. Arabtec in November bought almost a quarter of Depa, the interior contractor that fitted out the world’s tallest tower in Dubai, at a 47 percent premium.
Qatar Airways is filing a $600 million legal claim against Lindner Depa Interiors for causing a delay of as much as one year in the opening of the new Doha International Airport, the airline said yesterday. Lindner Depa, a German-Emirati joint venture, planned to build 19 airport lounges by summer this year as part of a $250 million contract, Qatar Airways said. The airport had been scheduled to open this month, it said.
“This is a set back for the company as it will get embroiled in lawsuits and might distract its focus from operations, plus the impact on the profitability in case they lose the case,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities. “In the long run, the share price for Depa will probably decline on the news, thus causing Arabtec to record losses on their investment.”
Lindner Depa said it’s seeking legal counsel after Qatar Airways statement, which it considers “false and misleading.” The venture hasn’t received claims by Qatar Airways, it said.
Depa shares have dropped 17 percent in 2012 to 35 cents, compared with a gain of 48 percent for Arabtec, which bought 150 million shares of Depa at 44 cents each last month.
Depa, which fits out luxury hotels, yachts and apartments, may post a loss of 94 million dirhams ($26 million) in 2012 after a profit last year, according to the median estimate of four analysts on Bloomberg. The company said in June the Doha International Airport terminated the joint-venture contract to refurbish the facility. Arabtec will probably post an 18 percent decline in full-year profit to 214 million dirhams, according to the average estimate of 11 analysts on Bloomberg.
Three analysts recommend investors hold Depa shares, while four analysts advise on holding Arabtec shares and 10 say to sell them, according to data compiled by Bloomberg.
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