Project delays: CIG CEO Raoul Gamsu tells how group went from profit to loss. Picture: RUSSELL ROBERTS
Project delays: CIG CEO Raoul Gamsu tells how group went from profit to loss. Picture: RUSSELL ROBERTS

Consolidated Infrastructure Group (CIG) plans to hold a bondholders meeting in February 2018 following a breach to its banking covenants.

The troubled construction company recently breached its banking covenants after a disastrous financial year, posting a loss of R150m versus 2016’s R393m profit.

CEO Raoul Gamsu blamed project delays in the company’s power-generation division, Conco, tendering at unrealistic margins and poor commercial management for the company’s full-year loss.

The proposed meeting comes after the diversified infrastructure group said on Tuesday that its auditors had reported on its financial covenants for the 12 months ended August 2017, which among other things showed that the coverage ratio had not been met and was not at least four times.

But the group had entered into negotiations with its lead bankers and certain noteholders — each of which agreed to receive nonpublic information from CIG — to request a covenant waiver effective until the February 15.

According to analysts, the group has not made operating free cash flow for almost six of the past seven years.

That, combined with a R441m loss from Conco, forced a breach to its earnings before interest, taxes, depreciation and amortisation interest cover covenant.

CIG said it "cannot make any collective decisions and therefore cannot bind any of the funders whether such funders have decided to join the funding committee or not".

However, the management team remained committed to a "transparent process and undertakes to work with their funders to mitigate risks identified pursuant to an independent business review process".