Funding plan fails to stem Stefanutti's slump
Listed construction company is exploring a longer-term funding plan due to sector liquidity problems
Construction engineering firm Stefanutti Stocks’ shares plummeted by a record 45.28% on Thursday despite the company’s announcement that it had secured an additional R391m in project funding.
Stefanutti, like other construction companies, has shrunk in value as the sector faces liquidity problems due to the slowdown in construction activity. The company’s shares are down 91.71% since the beginning of 2019. It closed at 20c on Thursday.
In July, Stefanutti said it had secured R120m in project funding. It said it had now received the second tranche of the R391m.
The group, which at the end of June had an order book of R12.6bn, has partly attributed the liquidity problems to delayed payments from customers.
“The group remains in discussions with the lenders to secure additional tranches of funding. The funds received from the first and the second tranches have been utilised to meet the group’s short-term liquidity requirements”.
Stefanutti, which operates in SA, sub-Saharan Africa and the United Arab Emirates (UAE), said it would explore longer-term funding.
“A strategic restructure team has been appointed to develop and assist with the implementation of detailed turnaround interventions for the group, including the securing of any requisite additional short- and long-term funding,” Stefanutti said.
It said as part of its restructuring plan it would consider raising new equity, selling non-core assets “to restore optimal operational and financial performance”.
“Once finalised, the restructuring plan will be considered by the board for approval.”
In the 2019 financial year the company, which has a market capitalisation of R54.54m, reported a headline loss of 70.12c, while revenue fell from the previous R10.4bn to R9.9bn.
Stefanutti former chair Kevin Eborall in June said the company must be seen in the context of the construction industry at large. Eborall said a combination of subdued investor confidence, financial crises at many state-owned enterprises and government departments, policy uncertainty and increases in various forms of taxation had stifled the industry.
He said, in light of the tough conditions in construction, the company had prioritised cash collection and had limited salary increases.