The Liviero Group, one of SA's largest construction groups with an annual turnover of more than R3bn has been placed in voluntary business rescue. File Image.
JOHANNESBURG - The Liviero Group, one of South Africa’s largest privately black-owned multi-disciplinary construction groups with an annual turnover of more than R3billion and providing employment to about 2600 people, has been placed in voluntary business rescue.

It follows listed construction group Basil Read last month also being placed in voluntary business rescue, after it failed to secure bridge funding from lenders and the suspension in trading in the company’s shares on the JSE. NMC Construction was placed in business rescue in December, but subsequently went into provisional liquidation.

Listed construction groups Aveng and Group Five have also been experiencing financial difficulties.

The financial difficulties of construction companies was largely related to the shortage of large government-funded infrastructure projects and government reducing the size of major projects into smaller contracts to facilitate transformation in the industry.

The Liviero Group is 51percent owned by Masimong Group Holdings, a black-controlled investment group founded by Michael Teke, a former president of the SA Chamber of Mines, now named the Minerals Council South Africa, chief executive of Seriti Resources, and chairperson of Richards Bay Coal Terminal.

Government projects

The group comprises a number of subsidiaries, including Liviero Building, Liviero Civils, Liviero Mining, Liviero Plant and Liviero Energy.

Luca Liviero, the chairperson of the Liviero Group said in a sworn statement in support of the group being placed in business rescue being necessary because of the group’s exposure to government projects, and particularly Liviero Civils, a group subsidiary, having an amount of more than R81million overdue by its government clients.

“These late and often non-payments have had an adverse effect on Liviero Group’s ability to recover its group charges, such as plant hire and other costs.

“This amounts to in excess of R24m,” he said.

President Cyril Ramaphosa, in a reply to the debate on his State of the Nation address in February committed to address problems encountered by business, particularly small businesses, with late and delayed payments by the government. Liviero added that although legal proceedings had been instituted via the courts to recover these unpaid amounts from government departments, these amounts remained unpaid.

He said Liviero Mining, another group subsidiary, had experienced severe work stoppages in the past several months, due to industrial action, community unrest and stoppages imposed on its clients that resulted in a loss of revenue of about R45m.

“With a shortfall in revenue and operating on a fixed cost base, Liviero Group in turn have not received its full quantum of overhead recovery and fixed monthly costs to cover the asset based finance.

“The Liviero Group has currently not honoured its financial obligations to its instalment sales and finds itself in breach of the respective instalment sale agreements,” it said.

Modern plant

The group’s web page said its operating companies were substantially backed by the groups’ impressive array of modern plant and equipment, with a replacement value in excess of R1.5bn.

Liviero said the company did not foresee any significant change in the immediate recoupment of its “Group fee/charges”, but was in the process of restructuring its financial obligations.

He said the group’s directors believed that there was a reasonable prospect of rescuing the company through business rescue proceedings, which it was hoped would allow the company to reorganise its affairs so it could innovate and grow.