Basil Read closes in on funds
• Construction firm, which went into business rescue in June, is close to securing money to continue doing business
Construction group Basil Read, which is facing financial ruin, says it is close to securing the money it needs to settle its current liabilities and continue doing business.
Construction group Basil Read, which is facing financial ruin, says it is close to securing the money it needs to settle its current liabilities and continue doing business.
The company is pinning its survival on housing and mining services as it looks to reinvent itself after having been unable to sustain itself on traditional infrastructure projects.
The group went into business rescue in June. On Thursday CEO Khathutshelo Mapasa said the company was nearing its funding target and two of its businesses held strong promise.
Business rescue allows a company to suspend all claims to creditors and restructure outstanding debt. This process aims to help a number of struggling entities to refinance themselves.
On September 28 2007, Basil Read’s share price hit a high of R33 when the company had an attractive order book and was building the Mbombela Stadium for the 2010 World Cup, but its fortunes have since soured, and its share price had crashed to 4c by June 29, before the stock was suspended.
Founded 66 years ago, the firm’s core businesses included roads and infrastructure development but a sharp drop in government spending on infrastructure projects as well as greater-than-anticipated costs for private work, including the building of an airport in St Helena, have forced Basil Read to review its operations.
The construction company lost 93% of its market capitalisation in 2018 and was placed into business rescue.
Mapasa would not yet provide details of the business rescue process but said that there were strong businesses within Basil Read, and that building integrated housing and providing construction services for mining companies were “guiding lights” for the group.
“I can’t say exactly how much we will raise as I don’t want to place the process into jeopardy but we are close to securing finance and we need much less than half-a-billion rand,” said Mapasa.
Business practitioner John Lightfoot said a turnaround plan for Basil Read would be released by July 20.
The company would sell its noncore assets including land that it owned, but had no projects for the small, nonprofitable subsidiaries. Basil Read would be focused on housing and mining until government infrastructure work returned.
It has nearly completed building St Helena airport, which is already operating, and it expects to earn R450m from servicing the airport for the next nine years.
“We remain a construction company in essence. Construction has been a bellwether for the economy and it’s clear that our economy is struggling.
“However, we have had success with our Cosmo City integrated development and we are doing more and more housing work. Then we can compete with the likes of Calgro M3,” Mapasa said.
Many of SA’s construction groups have been through trying times over the past few years, but Basil Read is the only listed one in business rescue.
Rival Group Five recently acquired R650m in bridging loans from a consortium of banks and also a commitment from creditors not to cut their credit lines.
I CAN’T SAY EXACTLY HOW MUCH WE WILL RAISE AS I DON’T WANT TO PLACE THE PROCESS INTO JEOPARDY