Murray & Roberts buys time in regaining control of Australian business
Information about the proposal will be available to creditors before their second meeting, which has been postponed to end-August
The Federal Court of Australia has granted the administrators of Murray & Roberts’ holding company in Australia, MRPL, an extension to convene a second creditors meeting by end-August.
The postponement buys time for the R414m JSE-listed group to revise its deed of company arrangement (Doca) proposal to creditors in the hopes of returning RUC Cementation Mining Contractors (RUC) to the group to re-establish the full scale and capability of Murray & Robert’s (M&R’s) core multinational mining platform.
“This extension will allow for a revised Doca proposal to be finalised and for any relevant conditions to the Doca proposal to be satisfied,” M&R said in a statement.
It added that upon completion of the proposed agreement, not only would MRPL come out of administration, but the RUC would be reinstated within the group.
M&R operates in several regions and has global expertise in shaft sinking, tunnelling, raise drilling, engineering, design and contract mining.
The specialist engineering and construction firm is in a desperate bid to regain control of RUC after it lost the mining unit after MRPL and Clough were placed into voluntary administration, a form of business rescue.
This was as Clough experienced funding pressures due to Covid-19 disruptions and a surge in working capital requirements at two key projects.
After the voluntary administration process began in 2022, Clough, which held the energy, resources and infrastructure business unit, and RUC, a diversified underground mining contractor and raise drill specialist, were spun off from the group with effect from December 5.
The loss of RUC meant that the group’s mining platform now comprises only two regional businesses in Africa and the Americas, which had combined orders worth R14bn at the end of last year.
Clough exited the voluntary administration in February with Milan-based Webuild taking control.
The flexible administration process in Australia also provides for the possibility of a compromise with creditors through the adoption of a Doca, a binding arrangement between the company and its creditors governing how the company’s affairs will be dealt with.
In March M&R said it and its Australian subsidiary, and administrators, Deloitte Australia, had entered into a binding arrangement which could cause it to regain control of RUC.
A Doca could include debt repayments and the potential sale of assets. It serves as an alternative to liquidation and must be approved by creditors.
The terms of the arrangement were adjusted a month later, in April, when the administrators agreed for Cementation APAC — a new Australian-registered entity, and a subsidiary of M&R UK — to replace it as a proponent under the proposed arrangement.
Initially, it was agreed that creditors would vote on the arrangement in mid-May. But in the latest update published on Tuesday, M&R told shareholders that the courts have granted the administrators an extension to the convening period for the second creditors meeting, to August 31.
Though the terms of the revised arrangement remain confidential, M&R said: “Information about the Doca proposal will be available in the administrators’ report to creditors ahead of the second creditors meeting.”
Should the situation pan out as planned, control of MRPL and RUC would revert to M&R with MRPL becoming a subsidiary of Cementation APAC. M&R would regain the full scale and capability of the group’s core multinational mining platform.
In March the group reported a net debt position of R2bn but it still had a healthy order book of R16bn.
The company has also said that considering its debt levels, it does not expect to declare a dividend this year.
M&R’s share price rose 3.33% to 90c on Tuesday, having slipped about 69% this year.
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