On the brink: Esor up for business rescue
KwaZulu-Natal’s eThekwini municipality blamed for holding R36m as another construction firm goes to the wall
Another decades-old construction firm has been pushed to the brink of collapse: this time, engineering and building group Esor, which on Monday applied for business rescue of its largest subsidiary, Esor Construction. It appears KwaZulu-Natal municipality eThekwini, hoarding R36m of Esor’s cash under a retention clause signed for the Northern and Western Aqueduct project, is largely to blame. Esor CEO Wessel van Zyl said had eThekwini released the funds 12 months ago when it approached them, "we wouldn’t be in this position today". Construction companies usually put down 10% of the value of a project with clients as a form of security but, said Van Zyl, it means they are invariably cash negative given a relentless squeeze on margins. "It’s my cash, but it’s lying in the client’s bank account. I think cash retention is one of the main items impacting on contractors today," he said.
Esor is also owed R22m by fellow construction outfit Basil Read, but is unlikely to get that mone...
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