Stefanutti Stocks mulls issuing shares after cash balance falls
Construction company Stefanutti Stocks says it may have to issue new shares after its cash balances decreased partly because of delayed payments from clients.
SA’s construction industry has been hobbled in recent years by a lack of infrastructure spending, tepid economic growth and slow payments from the private and public sectors.
In March, industry stalwart Group Five filed for business rescue — a process aimed at rehabilitating financially distressed companies — after lenders decided against giving it more funding.
Stefanutti said in its financial report for the year to end-February its cash balance had fallen to R881m from R916m a year earlier because of “a further increase in delayed payments from clients”.
“In order to address this short-term liquidity pressure, the group is exploring raising the required funding through a combination of specific ring-fenced project financing, a number of alternative funding solutions and, only if required, a possible fresh issue of shares,” it said.
The group’s shares have lost more than 90% of their value since reaching a high of R13 in mid-2011. The stock was last traded at R1.20.
Stefanutti said revenue in the year to end-February fell 5% to R9.9bn but its loss narrowed to R111.3m from R547m.
“Confidence in the South African economy remains at an historic low,” the group said.
A continuing contraction in construction activity would mean turnover and margins would remain under pressure, it warned.
“Once again, and consistent with experiences reported by other construction companies, the group has been negatively affected by disruptive and unlawful activities by certain communities and informal business forums in certain areas of SA.”
The group, whose order book stands at R11.5bn, said it was “assessing various options” to raise its levels of black ownership.
Group CEO Willie Meyburgh will retire at the end of May, Stefanutti said in 2018. He will be replaced by Russell Crawford.