Picture: ISTOCK
Picture: ISTOCK

Basil Read Holdings had applied to the JSE for the voluntary suspension of the listing of its shares after a key unit started business rescue proceedings, the construction company said on Wednesday.

The cash-strapped company announced on Friday that Basil Read Ltd, a wholly owned subsidiary that houses its construction unit, had started business rescue proceedings after it failed to secure bridge funding from lenders.

Its shares have plunged more than 90% from a high of 22c to close at 1c on Friday.

A trading halt was declared on Monday.

Basil Read has appointed Siviwe Dongwana of Adamentem Chartered Accountants and John Lightfoot of Matuson and Associates as business rescue practitioners.

"There is uncertainty in terms of the impact of the voluntary business rescue proceedings instituted at Basil Read Limited, on the Basil Read Holdings Limited Group as listed on the JSE," it said. It added the suspension would be until such time as the effect on the listed group could be quantified.

Bridge funding

The company’s construction division has for some time been experiencing cash flow difficulties stemming from, among other reasons, mismatched cash inflows and outflows, it said on Friday.

To mitigate this, it sought to raise bridge funding from a consortium of lenders in order to complete construction contracts, but was advised on June14 that most lenders were not prepared to make the funding available to it outside of a business rescue process.

Throughout 2017, Basil Read struggled to obtain money to pay creditors, provide working capital and reduce debt.

In the year to the end of March, it reported a net loss of R743m, while its order book plunged from R12.3bn to R4.5bn.

At the end of its financial year end Basil Read’s current liabilities of R2.1bn exceeded current assets of R1.4bn, while cash had fallen to R126.4m.

The company is trying to implement a turnaround strategy that involves cutting costs and exiting loss-making contacts and assets.

Reuters

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