He noted that Group Five targeted the sale of 51% of its South African constructionbusiness to an empowered shareholder, as part of the Voluntary Rebuilding Programme (VRP). He said the VRP stipulated only a 40% sale to an empowered buyer, but that “markets and clients” were increasingly demanding to do business with companies that were 51% black-owned.
Mosai said Group Five had already appointed a corporate adviser, with the process to enable the sale under way. He said the sale had been delayed as Group Five first “had to clean up the business”. He added that he could offer no time frame for the sale.
Group Five on Thursday reported a R775-million loss for the six months ended December 31, compared with a R339-million loss in the comparable period in 2016. This number included a R157-million loss in the South African constructionbusiness, a R51-million loss in the rest of Africaconstructionbusiness and R649-million loss at the Kpone contract in Ghana.
In an effort to improve liquidity, the group was seeking bridging finance, with a funding consortium indicating that it would be willing to provide up to R650-million. A potential rights offer might also be on the cards. Steps taken to reduce costs within the company include rightsizing the business, with the closure of the roads and earthworks, plant, low-cost housing and nuclear businesses.
Headcount has been reduced by 420 people in the last nine months. Group Five will also move from its Waterfall premises, in Midrand.
Texeira said Group Five’s shrunken construction and engineering, procurement and construction businesses should reach break-even by June 2019. This move forms part of a new structure that will see the company focus on four business areas, namely developments and investments; turnkey projectsolutions; opeations and maintenance and construction.
“We looked at the markets where we performed and looked for pockets of excellence, extracting those businesses,” noted Mosai. “We believe that our revised strategy will position the firm for a more successful future.”
- Links: Engineering News
More in NewsRead More »