CIG and lenders extend debt agreement to end-July
Cash-strapped infrastructure firm says key conditions to the debt restructuring agreement will be negotiated in June
Listed infrastructure group Consolidated Infrastructure Group (CIG) said on Tuesday that its lenders had agreed to extend the debt standstill agreement with the group until July 29.
In terms of a debt standstill agreement between creditors and an affected company, the participating creditors agree not to enforce scheduled repayments until the debtor has finalised its financial restructuring plans.
The extension followed the expiry of CIG’s debt standstill agreement on May 31. The company said it expected to agree to key conditions to be included in the debt restructuring agreement by the end of June.
“The group, along with its funders, are focused on concluding a finalised restructured debt agreement within this time frame. Specific conditions on covenants, pricing and other matters as would be expected in support of a normal debt restructuring process, are being discussed,” CIG said.
In the six months ended February 28, CIG’s financial liabilities amounted to R949.4m.
Canadian investment firm Fairfax recently threw CIG a financial lifeline. In 2018 CIG entered into a number of agreements with the Toronto Stock Exchange-listed Fairfax.
These included an upfront loan of R300m, a R800m rights offer to CIG shareholders, fully underwritten by Fairfax offered at R4 per share and conversion rights under which Fairfax has an option to covert the upfront loan into CIG shares.
CIG’s poor financial performance has continued in the 2019 financial year as half-year revenue fell by 8.8% to R1.2bn. In April 2019 CIG brought on board former Group Five CFO Cristina Teixeira as its finance chief.
The company, a player in SA’s renewable energy sector, has attributed the poor performance to tough macroeconomic factors which affected most of its operations, especially the engineering, procurement and construction businesses.
“The results have been further impacted by impairments to unrecoverable work in progress and receivables, mainly in [subsidiary] Consolidated Power Projects Group [Conco], as well as impairments to goodwill and intangibles and deferred taxation,” CIG said.
The group, whose portfolio straddles power, building materials, oil and gas and rail, reported a net loss of R1.2bn. In the year ended August 31 2018, CIG reported a net loss of R2bn.
The company, which has operations in SA, sub-Saharan Africa and the Middle East, said Conco — its largest subsidiary and key driver of results — continued to experience difficult trading conditions and slower than expected contract awards.
“This resulted in budgeted profit from unsecured contracts failing to materialise, along with an underrecovery on project overheads carried in anticipation of these contracts,” CIG said.
Conco, headed by former Eskom interim CEO Johnny Dladla, is Africa’s leading supplier of high voltage turnkey electrical substations, overhead power lines, renewable energy — wind and solar — and related products.
CIG said it expected growth in renewable energy and off-grid projects in the rest of Africa.