A third director quits the Murray & Roberts board

A third Murray & Roberts (M&R) board member has resigned, further eroding the board’s strength as the group navigates business rescue in its SA operations amid suspended trading on the JSE and a cash crunch.

Non-executive director Alexandra Muller, who was appointed in July 2022, resigned from the board of directors with effect from December 9, M&R announced on Friday, but did not stipulate reasons.

“The board wishes to thank Ms Muller for her valuable contribution during her tenure and wishes her well with her future endeavours,” it said.

Muller becomes the third board member to leave the firm since its M&R Ltd and trading division OptiPower entered business rescue on November 22 and were placed under the supervision of the appointed joint business rescue practitioners: Petrus Francois van den Steen, Joshua Bruce Cunliffe, and Denis Macheya Chifunyise. 

Group chair Suresh Kana recently announced his resignation with effect from November 30, alongside non-executive director Jesmane Boggenpoel, who is set to leave in mid-December.

Clifford Raphiri has been appointed as interim chair with effect from December 1, until a permanent appointment is made. Non-executive director Alex Maditsi is the only other independent non-executive that remains on the board alongside Raphiri.

The executive committee comprises seven members including CEO Henry Laas and CFO Daniel Grobler.

Muller’s resignation was announced a day after the first creditors meeting in respect of the business rescue proceedings was convened via a digital platform on December 5, according to M&R’s website. Creditors were advised to submit their claims against the company to the joint business rescue practitioners.

The departure of three directors from the engineering and contracting major in quick succession comes just two weeks after M&R asked the JSE to suspend the trading of its shares. M&R shares were suspended at R1.10 on November 22, a steep drop from its three-year high of R14.35 per share.

The group has opted to undergo voluntary business rescue in two of its divisions to deal with a variety of issues, including growing limitations on liquidity.

It said Murray & Roberts Ltd had operated in SA with limited working capital facilities for some time, despite negotiating with a group of four SA banks to lower its debt. This ongoing lack of liquidity has caused needless losses for the company as well as adversely affecting its OptiPower operations, which is a trade division of Murray & Roberts Ltd in SA.

OptiPower has been dealing with cash issues that have caused delays in procurement and projects.

On the other hand, M&R Cementation’s SA operations were affected by the recent descoping of the Venetia contract, which represented more than 50% of M&R Cementation’s business in SA.

Restructuring the company’s operations, refinancing its outstanding debt and selling off assets are all components of the rescue plan. The board of M&R Holdings plans to sell off noncore assets to meet the group’s obligations to the banking consortium and restore liquidity for Murray & Roberts Ltd.

“It is critical for Murray & Roberts Ltd to find a solution for its declining liquidity position, arising principally from the losses in its SA trading division OptiPower, which has been worsened by the descoping of the Venetia contract as the mining contractor has been a source of cash flow to Murray & Roberts Ltd in the past,” the group, led by Henry Laas, said.

The group has until January 2026 to repay R409m, having reduced the outstanding amount from a peak of R2bn last year.

The firm is no stranger to business rescues. At the end of 2022, M&R announced that Clough and its subsidiaries were placed into voluntary administration in Australia with immediate effect, together with the JSE-listed group’s Australian holding company, MRPL, after the proposed disposal of Clough to Webuild was terminated.

Clough exited administration in mid-February when Webuild, of Italy, reached an agreement with administrators to acquire the Australian organisation and certain projects, a development that represented the final loss of Clough to M&R.

After the hit in Australia, the group is now an engineering and contracting services company, focused on the Africa and Americas underground mining markets, and renewable energy and power infrastructure in Sub-Saharan Africa.

M&R, which used to be a darling of the SA construction industry, left the local sector in 2016 as projects dried up after the spending frenzy before the 2010 Fifa World Cup. 

The group has plans to use the newly formed Cementation APAC to expand its mining operations in the Asia-Pacific area in 2025, after refinancing its SA debt.

With Kabelo Khumalo

gumedemi@businesslive.co.za