PRETORIA – Aveng, the financially troubled listed construction and engineering group, expects to announce the disposal of at least one of its identified non-core assets “in the very short term”.
Eric Diack, the executive chairperson of Aveng, confirmed this yesterday, adding that they had received expressions of interest on almost all of these businesses. “Some of those have moved into due diligence and hopefully they will move into binding offers in pretty short shift,” he said.
The identification and disposal of non-core assets was one of the three pillars in Aveng’s strategic review to turn around the group’s performance.
It identified Aveng’s Australian business McConnell Dowell and open-pit mining business, Moolmans, as core businesses, while Grinaker-LTA, manufacturing and steel were deemed non-core.
The two other pillars of the strategic review involved the capital restructuring of Aveng and improving the operational performance of its core businesses.
Diack said the total proceeds from disposals would be significantly higher than R800 million, which would be used to reduce the group’s debt and for working capital for the core businesses.
The target date for the completion of all the non-core disposals was June next year.
Diack added they were considering a number of expressions of interest for parts of Grinaker-LTA and three of the businesses – water, mechanical and electrical and Building South – were performing well and would undoubtedly find a home soon, together with the inland building business.
He said the civils business would be more difficult to sell, because they were winding down its projects, but stressed it would not be liquidated.
“We need to sell them in a shape that they are saleable,” he said.
Adrian Macartney, the chief financial officer at Aveng, said civils business accounted for 90 percent or R323m of the R367m loss Grinaker-LTA reported in the year to June.
Diack believed the announcement by President Cyril Ramaphosa on Friday, on the establishment of a R400 billion infrastructure fund, would be positive and give a “tailwind” to the disposal process.
The restructuring of Aveng’s balance sheet involved a rights issue that raised R493m, the early redemption of a R2bn convertible bond that was to mature in July next year and the restructuring of the group’s bank debt.
Diack said the end result of this was that Aveng reduced its gross debt by about R1.5bn, increased its cash position by R493m, improved its net cash and shareholder funds position by R2bn and reduced the group’s debt-to-equity ratio to an acceptable level at 40 percent from 127 percent.
“We now have a solid balance sheet, which provides us with a platform to execute our strategy,” Diack said.
Diack also added that the improvement in the performance of McConnell Dowell and Moolmans would be an ongoing exercise but they expected it to happen during the current financial year.
Aveng on Tuesday reported a net loss of R3.5bn, compared to the R6.7bn loss in the previous year, with the headline loss a share decreasing to 311.6 cents from 1 197.0c.
Aveng closed 25 percent lower at 3c a share on the JSE yesterday.