Basil Read completes contractual obligations on loss-making projects
The construction firm says between June and September it completed 11 contracts
Construction engineering company Basil Read says it has made progress on the completion of loss-making contracts, so as to minimise the risk of being penalised for missing deadlines.
In construction, performance guarantees are used as security to ensure that a contractor meets contractual obligations.
Basil Read said between June and September it had completed 11 contracts, while further four contracts were ceded to other contractors to complete.
The company, which went into business rescue in June 2018, said in that period, five contracts were terminated. However, only two of those resulted in penalties. Basil Read said it was now completing two other contracts.
The performance guarantees called were for the St Helena Airport project and the N3 Toll Concession (N3TC) road project.
Basil Read said it had made progress in meeting a key objective of the business rescue plan, which was to facilitate the completion of loss-making construction contracts to minimise penalties.
Contingent liabilities of these guarantees have been reduced from R1.141bn to R575m, which was achieved through a combination of completion of contracts, termination of onerous contracts, changing the scope of projects deemed onerous and cession of loss-making contracts.
But Basil Read said its business rescue practitioners, John Lightfoot and Siviwe Dongwana, had found recovering outstanding construction claims against clients time-consuming, tedious and costly.
“The company has however managed significant success in the resolution of many such claims,” it said, citing successes against Transnet and the Trans-Caledon Tunnel Authority, the state-owned entity responsible for financing and implementing bulk raw water infrastructure projects.
“The company continues to pursue the other outstanding claims which are substantial. The success in the recovery of these claims will impact materially on the end result of the business rescue process,” it said.
Basil Read said its businesses — mining and development — which are not in business rescue, remained self-sustaining. The business rescue practitioners had appointed an independent sales adviser “to value the mining business and adjudicate on potential offers for the business”.