Group Five to delist from JSE after 46 years
The embattled construction group has been in business rescue since March 2019, and has been in the process of winding down the business
Group Five, once a revered construction company that helped build Moses Mabhida Stadium and roads as far away as Eastern Europe, will leave the JSE in June with a whimper.
Construction companies have gone from being stars on the JSE to having barely any presence at all as projects, including infrastructure work for the government, have dried up in an economy that has not grown at more than 2% in five years.
The delisting of Group Five, which traces its roots back to the 1970s with the tie-up of five construction companies, underscores a growing headache for Africa’s biggest bourse as a weak economy stunts initial public offeringsand the government-imposed lockdown to curb the Covid-19 pandemic threatens cascading corporate failures.
Group Five will leave the JSE on June 15, ending a more than four-decade history as a publicly traded company.
Its biggest subsidiary has been in business rescue — a process that allows a financially distressed company to delay creditors’ claims against it or its assets — since March 2019.
Its business rescue practitioners, Peter van den Steen and Dave Lake, concluded that the company would be wound up and between 3,000 and 3,500 jobs saved through the restructuring and sale of businesses and contracts to new owners. The Covid-19 pandemic has delayed parts of the winding-up process, the practitioners have said.
Shares in Group Five were valued at R99m when they were suspended in March 2019, an astonishing turnaround of fortunes for the company whose market capitalisation peaked at R6.8bn in 2007.
Group Five’s management said on Monday the company could no longer meet the listing requirements and had to leave the JSE, where it attracted public investors for 46 years.
This means the public will be left with a handful of construction companies, most of them penny stocks, to put their money behind. And the JSE, which already has 300 fewer listed companies than it did two decades ago, will be tallying up losses from listing fees.
WBHO, Murray & Roberts, Esor, Stefanutti Stocks and Basil Read remain on the JSE.
But Murray & Roberts now focuses on engineering services for underground mining, power and water provision and for oil and gas extraction.
WBHO closed at R88.81 a share and Murray & Roberts at R5.06 on Monday, down 34.77% and 52.66% year to date.
Stefanutti’s share price has lost 95% over the past three years and sits at 15c.
Esor and Basil Read have both had their listings suspended, last trading at 3c and 4c, respectively, and are in business rescue processes.
Esor and Basil Read continue to operate and neither has announced they will delist.
Aveng, once a construction stalwart, has repositioned itself as an infrastructure, resources and mining group.
Group Five could no longer keep its listing because it did not have a duly constituted board following resignations of nonexecutive directors in June and the resignation of its interim CEO in October 2019.
No board committees were in existence and therefore Group Five does not comply with corporate governance rules, under the King IV Code on Corporate Governance.
Group Five has been unable to release audited financial results, with the last financial results having been released on June 30 2018, which contained an operating loss of about R1.2bn.