Aveng struggles for survival
With the M&R merger offer off the table, debt-laden Aveng is scrambling to keep going
Is Aveng, which just a decade ago was SA’s biggest construction company, nearing the end of the road? Already, the crunch in infrastructure spending has claimed a number of construction scalps — the most prominent of them Basil Read, which tipped into business rescue in June. Aveng has been surviving on fumes until now: for the six months to December last year, it made a bottom-line loss of R346m. And with debt of R3.25bn, it can only be a matter of time before its bankers start demanding a greater say in any revival plan. Already, certain debt-to-equity covenants may have been breached, as Aveng’s shares have fallen 98% in the past year to just 6c. It’s a far cry from the heady days of 2007 when contracts to build World Cup stadiums were rolling in, and its share price was R71. So can it survive? And if it does, will it be worth investing in? "They must find cash," says analyst Wayne McCurrie of FNB Wealth & Investments. "They can go for a rights issue at a huge discount. That will...
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