Embattled Aveng’s Grinaker-LTA Ground Engineering sale falls through
Buyer could not raise the required R7.5m, construction company says
Embattled construction group Aveng, whose share price has lost more than 99% of its value since the beginning of 2017, said on Friday that the sale of its Grinaker-LTA Ground Engineering (GEL) business fell through due to the purchaser being unable to raise the R7.5m required.
The failed deal is a setback for the company, which is selling off noncore assets to bolster its balance sheet.
The sale is part of Aveng’s disposal of noncore assets after the company’s strategic review in February 2018. The review is in line with the company’s move to position itself as an international infrastructure and resources group operating in selected fast-growing markets.
The disposals would enable the group to focus on the core assets of McConnell Dowell, an Australian specialist infrastructure contractor, and subsidiary and surface mining contractor Moolmans.
Aveng said on Friday it still considers GEL noncore and intends to dispose of the business.
Aveng said in July it would sell GEL as a going concern to newly formed, special-purpose vehicle Wolf Capital Partners and the current management of GEL.
GEL is a geotechnical contractor based in Johannesburg.
Aveng has also sold the Grinaker-LTA Rand Roads division to investment special purpose vehicle Ultra Asphalt, saying on Friday that it received R25m from the sale. “The transaction has become effective and the business has been delivered to the purchaser,” Aveng said.
In the six months ended December 31 2018, the roads business reported a net loss of R10m.
The company also disposed of Aveng Grinaker-LTA Construction and Development, but said on Friday that a working capital adjustment means it will receive R30.5m less than the R100m previously announced.
It has previously sold a number of assets including Aveng Dynamic Fluid Control, its pumps and valves business, for R165m in July.
Aveng’s share price doubled to 2c in afternoon trade on Friday, though this is not an unusual move for the volatile share.
Correction: 9 December 2019
An earlier version of this article incorrectly stated that Aveng had disposed of Aveng Grinaker-LTA Construction and Development. It has, in fact, disposed of Aveng Grinaker-LTA Construction.