Group Five Considers Rights Issue to Bolster Finances

South African engineering Company, Group Five is looking at raising money via a rights issue to repay debt and bolster its finances after reporting a bigger than expected first-half loss following problems with a Ghana power project.

Group Five, with operations in Africa and Europe, is going through a restructuring in which it has sold off some businesses, exited loss-making contracts and cut 420 permanent staff.

The cost of the restructuring and the impact of a weak construction market in South Africa means the company needs to bolster its shortterm financing.

Group Five has signed an agreement with a funding consortium that is willing to provide up to R650 million of short-term bridge funding which the Company hopes to access by the end of April, 2018 once all conditions have been met.

“The Group believes it is not prudent to rely solely on debt and would therefore prefer to approach shareholders to discuss recapitalisation options and replacement of this debt as soon as possible,” group Chief Financial Officer, Cristina Teixeira said during the Company’s half-year result presentation.

Group Five intends to obtain any necessary approval from shareholders in the second half of 2018, it said.

“We expected this period to remain very difficult. Unfortunately, even against this expectation, our results for the six months to December were significantly below our objectives and very disappointing,” Chief Executive, Themba Mosai said in a statement.