JOHANNESBURG - Group Five has concluded a R650million bridge funding deal for 12 months from a consortium of local banks and has once again raised the possibility of a rights offer to raise funds.
Its share price rose 1.17percent yesterday on the JSE following the announcement, to close at R2.60.
The listed construction firm said it would in due course discuss various funding options with its shareholders.
It had previously announced the deal in JSE news service statements, which was done to fund the firm’s short-term funding needs due to its declining South African construction order book, the cash funding needed to complete the group’s Kpone contract in Ghana, as well as the rate at “which claims, debtors and non-current assets could be realised to fund outflows” .
Group Five last month reported an increase in its core operating loss to R727.3million in the six months to December from R33.6m in the prior period. Its Kpone independent power plant project in Ghana accounted for R649m of this loss.
The group said in March that it was exposed to possible delay penalties of up to $62.4m (R778.33m) on the $410m independent gas- and oil-fired combined cycle power plant contract in Kpone.
Further delays
Themba Mosai, the chief executive of Group Five, confirmed in April that there had been further delays on the Kpone project, with the completion date extended from March to June this year, which would result in the group incurring further costs.
The security for the bridge funding comprises a pledge and cession in security by Group Five of its rights, title and interest in its manufacturing assets, its European investments (namely its service concessions investments), as well as its European operations and maintenance businesses.
“The discharge date is expected to be 12 months from May 11,” it said.
Group Five last month announced that it had embarked on a drastic restructuring and reorganisation, which had resulted in the retrenchment of 420 senior employees in an aggressive overhead reduction exercise and a significant change in focus away from construction to infrastructure.
The group also planned to move out of its head office in Waterfall in Midrand to save costs.
The construction company yesterday said that it continued to improve its free cash position over an 18-month period through the recovery of long-outstanding debtors and the conversion of non-current assets and other cash-enhancing initiatives.