Ailing Aveng sells two businesses to bolster balance sheet
The construction firm has agreed to sell Aveng Grinaker-LTA Rand Roads and Aveng Grinaker-LTA Ground Engineering business
Construction firm Aveng, whose shares have lost 99.95% of their value over the past 11 years, says it will sell two noncore businesses to strengthen its financial position.
It had agreed to sell Aveng Grinaker-LTA Rand Roads and Aveng Grinaker-LTA Ground Engineering (GEL) business, it said in a statement on Friday.
The Rand Roads unit, which provides road rehabilitation and infrastructure services, would be sold as a going concern to Ultra Asphalt for R30m plus the value of inventory, which is currently estimated at R7.5m. A further working capital adjustment was also possible.
"The proceeds from the sale will be used to strengthen the financial position of Aveng," the company said.
The net asset value of Rand Roads amounted to R57m at the end of 2018. The unit reported a loss after tax of R10m for the six months to end-December 2018.
Aveng said it would also sell GEL as a going concern to a newly formed special-purpose vehicle whose shareholders include Wolf Capital Partners and the current management of GEL. The sale would fetch R7.5m.
"GEL is a geotechnical contractor based in Johannesburg and was identified as noncore, as part of the strategic review," Aveng said.
The contractor’s shares, which reached highs of more than R66 in 2008, were last traded at 3c.
SA’s construction firms are under severe pressure owing to a protracted downturn in the industry.
Group Five and other former industry heavyweights including Basil Read, have been forced into business rescue.