Arabtec Holding (Arabtec) Board of Directors is set to meet on 13 June to discuss how to further enhance its capital structure, through holding discussions with its major shareholders and banks. This comes two weeks after the shareholders of the company approved a plan to use AED1bn of its statutory reserves to reduce part of its accumulated losses. As of the end of March 2016, statutory reserves amounted to AED1.15bn, while accumulated losses were AED2.27bn.   Our view: Options for enhancing its capital structure would include: i) borrowing more from the banks, possibly of more long-term nature to support Arabtec’s bidding process; ii) a capital increase, closing which would be challenging, in our view, in light of the deterioration in the operating environment; iii) a bond issue, which may prove to be too costly for the same reason; or iv) a convertible bond, which may help alleviate some of the costs, while providing a more attractive proposition to potential lenders. (Company disclosure, Mai Attia, Sara Boutros)   Arabtec (DU): AED1.43 as of 9 June 2016, Rating: Sell, FV: AED1.13/share, MCap: USD1,798mn, ARTC UH / ARTC.DU