Group Five sells another business
The construction firm is disposing of assets in a controlled manner to ensure better returns for creditors
Construction company Group Five is set to sell one of its businesses in a move that could see creditors receive a better payout at the completion of the company’s business rescue.
Group Five and subsidiary Group Five Construction have been in business rescue since March 2019 after they experienced financial problems due to a lack of contracts.
The companies have two separate business rescue plans.
Business rescue practitioners Peter van den Steen and Dave Lake of Metis Strategic Advisors said on Monday that Group Five Construction subsidiary Group Five Projects had been sold to privately owned Teichmann Group, of which former Springbok captain Gary Teichmann is a director and cofounder. On its website, Teichmann, which was established in 1995, describes itself as a multinational group active in construction, mining, drilling, agriculture, plant and equipment hire.
In terms of the Group Five Construction business rescue plan, which its creditors approved on September 11, secured creditors were expected to receive between 66c and 78c, compared with 18c they would have received had the company been liquidated.
Secured creditors are the banks that provided funding after Group Five and Group Five Construction went into business rescue. The money, described as post-commencement funding, covers working capital requirements during the course of the business rescue process.
On April 17 2019, Group Five Construction concluded a post-commencement finance agreement with a group of lenders which, as at September 18, amounted to R153m, including interest.
Van den Steen and Lake said in the plan that Group Five Construction shareholders were unlikely to receive any returns. As at February 28, Group Five Construction’s total liabilities were R6bn.
According to the plan, such distributions to creditors depended on, among other things, realising “fair value” on the sale of assets through “carefully managed sale processes and aggressive cost management during the business rescue proceedings”.
The plan also proposed the restructuring and sale of operating businesses and divisions to save between 3,000 and 3,500 jobs.
Van den Steen and Lake said the sale included several of Group Five’s construction businesses throughout Africa.
The group has a presence in Burkina Faso, Ghana and the Democratic Republic of Congo.
“The purchase comprises all assets, including the construction plant and equipment in these locations. An existing construction project on a mine in Zambia will still be completed by Group Five, as well as a further project in SA,” they said.