Protech halts trade, secures rescue plan

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br protech Independent Newspapers Protech Khuthele's board says that although the group is in financial straits, it could be rescued as its assets exceed its liabilities. Photo: Leon Nicholas

Trading in the shares of Protech Khuthele were suspended on the JSE yesterday at the request of the engineering group.

The company’s shares were at 17c shortly before trading was suspended after reaching a one-ear high of 60c in the middle of October.

Protech said its board had decided to voluntarily suspend trade as there was still “material uncertainty” regarding the company as a going concern. The business rescue plan for the company was at an early stage and all stakeholders were being engaged.

“Shareholders will be kept appraised of the developments in due course,” the group said. Protech at the 11th hour last month postponed the release of its results for the year to February and then reported on May 30 that it had applied for business rescue.

This followed the group receiving a demand from suppliers for immediate repayment of project expenses incurred, which it was unable to make.

The firm had also become aware on May 30 that the anticipated receipt of R40 million from a substantial debtor might be delayed or possibly not paid in full, which would adversely affect its cash flow.

“As Protech cannot meet its commitments, Protech has no choice but to lodge an application for business rescue,” it said, adding that Gavin Gainsford had been appointed the rescue practitioner.

Protech did not identify the major debtor whose R40m payment had been delayed nor did it specify the amount demanded from the company or identify who had issued the demand.

However, in a trading update published in March, Protech highlighted problems with a mining infrastructure project in the Democratic Republic of Congo where it was a 33 percent joint venture partner with Group Five.

“The difficulties include payment disputes and cost overruns,” it said.

Protech on Friday advised its shareholders that the board resolutions necessary for business rescue for seven subsidiary companies of the group had been filed with the Companies and Intellectual Property Commission last Tuesday.

The other subsidiary companies are Protech Khuthele Properties, Impact Compaction, Protech Khuthele Property Investments, Protech Readymix, Pela Plant and South African Road Testing Services.

On May 30, the firm’s board concluded that although the company was financially distressed, there was a reasonable prospect of rescuing the company because the assets, fairly valued, exceeded its liabilities.

“The board of Protech is of the opinion that the implementation of business rescue will afford the directors the opportunity to develop and implement a business rescue plan in a manner that will optimise the likelihood of Protech continuing as a going concern,” it said.

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