CAPE TOWN – Ailing construction group Group Five has been placed in business rescue and its shares have been suspended on the JSE.
The group and its subsidiaries have said to have been experiencing cash flow difficulties due to significant operating losses and negative cash flows in G5 Construction and its subsidiaries, a released statement said on Tuesday.
To try and alleviate the cash flow crisis, bridge finance of R650 million had been sought from a consortium of lenders and the funding was provided last April.
G5’s financial woes, however, worsened when a guarantee of $62.7 million (about R895 million) was called in around November 16 last year, and for $43.8 million in December, relating to the Kpone Gas and Oil-Fired Combined Cycle power plant contract, which the client terminated at the end of November 2018.
G5 Construction was also retrenching staff, and significant severance pay would become payable, read the statement.
BUSINESS REPORT ONLINE