Once proud construction company Group 5 says a fire sale of its assets is now the only option
- Construction company Group Five is in business rescue – but its rescuers say they have not been able to borrow money to get it back on its feet.
- The company must sell some of its assets in haste, it announced on Friday afternoon.
- Shareholders won't get a say in those sales, and will only get details of what they sold for how much after the fact.
Group Five is now in a position that a fire sale of some of its assets is the only option, it told shareholders on Friday afternoon.
The business rescue practitioners that now control the company – which traces its roots back to 1878 – have formally declared that all "alternative methods of financing have been exhausted", and that selling assets is the only remaining option.
Those assets will have to be sold fast; there is no time to get shareholders to approve the deals, the company said. Instead shareholders will be updated every month with some information on "key disposals", and are to get more details when a business rescue plan is published at the end of June.
See also: These SA highway projects have been left half-finished after two construction giants went bust
There are as of yet no details on what assets are up for sale nor who the buyers may be. The company said only that negotiations about "a number of different assets" are underway with "a multiple of potential arms' length purchasers".
The money raised will go in part towards satisfying lending banks and in part to working capital.
If the sales do not go ahead, Group Five said, it will not have the money to proceed with business rescue proceedings.
In January Group Five announced the sale of some of its manufacturing assets, including Everite, a Johannesburg factory that makes fibre-cement products under the Nutec brand, for R480 million.
It also holds equity stakes in roads in Poland and Hungary, and in various property developments such as the Kalahari Mall in Upington and the Beit Bridge Retail Mall in Zimbabwe.
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