Embattled Group Five aims to complete most of its projects
Group Five’s business rescue practitioners want the contractor to complete 60 of the 79 construction projects it is working on, as the company fights for its survival.
In March, Group Five announced it had gone into business rescue — a process aimed at rehabilitating financially distressed companies — because it could not get additional funding from lenders.
Among other measures, business rescue regulations let companies suspend or cancel contracts.
“Some projects have been terminated by employers early on in the business rescue process and have caused great disruption and financial cost to both the company and the employers,” business rescue practitioners David Lake and Peter van den Steen, of Metis Corporate Advisory, said in a status report.
The practitioners, who said more retrenchments were needed to cut costs, said funding had been secured from lenders for the construction business. This would pay for working capital, litigation linked to a problematic project in Ghana, and to complete projects, including a roads project in the Western Cape.
“We are hopeful that as many as 60 out of 79 projects in the construction portfolio will be completed,” they said. “However, there is a risk that one of the projects may not be rejuvenated despite funding having been made available to do so.”
The group was in talks “with arms’ length counterparties” to sell seven assets so it could raise funds.
“We are running formal sales processes with arms’ length bidders in respect of three such assets,” the practitioners said.
The practitioners had also entered into binding sale agreements for 10 assets, and were restructuring three businesses before looking to sell them. Additionally, 180 pieces of unused equipment had been sold for R115m.
They planned to ask creditors for another extension regarding the publication of the business rescue plan “in view of the complexity of the matter”.
In a separate status report, the practitioners said Group Five’s survival was “highly dependent” on the successful rescue of the construction arm.