Aveng shares plunge after calling off BEE deal with Kutana Construction
Aveng’s share price fell 14.5% to R1.65 on Friday after the construction group said it had called off a proposed empowerment deal with Kutana Construction.
Aveng announced in October 2016 that Kutana, which it described as a black women-owned entity, would acquire 51% of its subsidiary Aveng Grinaker-LTA for up to R856.8m.
The deal involved an upfront payment of R22.7m with the balance paid over three years based on six times its subsidiary’s earnings before interest, tax, depreciation and amortisation capped at agreed levels.
The construction group said it was terminating the deal after extending the deadline for the upfront payment from the original February 1 several times.
The most recent agreed deadline was October 1, which Kutana once again failed to meet.
Aveng’s deal with Kutana was linked to a settlement JSE-listed construction groups made with the government.
The group said it remained committed to its obligations under the settlement agreement, and had "initiated the necessary actions to ensure it complies with the" agreement.