Group Five rescue to save 3,000 jobs
A successful rescue of the ailing Group Five construction firm will save up to 3,500 jobs and improve the shortfall to creditors to R5bn.
On Friday business rescue practitioners Peter van Steen and Dave Lake released the rescue plans for Group Five Construction and Group Five Ltd, which are separate legal entities.
Group Five Construction represents the majority of the businesses, claims and recovery value within the greater group.
Like a number of other major construction firms in SA, Group Five has struggled to stay afloat in a depressed local economy. In March it filed for business rescue after it failed to obtain additional funding from a consortium of lenders.
Voting on the business rescue plans for both entities will take place in consecutive meetings on September 11.
In a statement issued on Friday, Van Steen and Lake said they were pleased to present a solid rescue plan for Group Five Construction. “The losses incurred by creditors will be materially less, at approximately R5bn, under the proposed rescue plans relative to the alternative scenario of a liquidation of the company.
“Through the restructuring and sale of businesses we anticipate that between 3,000 and 3,500 jobs will be saved, albeit under new ownership.”
On successful implementation of the rescue plan, creditors that hold security for a claim against the company (secured creditors) are expected to receive distributions of between 66c and 78c in the rand — relative to 18c forecast in liquidation.
Creditors with unsecured claims (concurrent creditors) are expected to receive between 9c and 20c in the rand, relative to 3.4c forecast in liquidation.
The practitioners successfully secured funding to run operations during the business rescue proceedings and to ensure the realised asset sale value is optimised and losses from projects are minimised.
Wherever possible, subsidiaries and operating divisions of Group Five Construction are being restructured and disposed of to new owners for fair value, on a solvent basis and as going concerns. Where this is not possible, a wind-down of the relevant subsidiaries and companies will be implemented.
It is not anticipated that Group Five Ltd will deliver any returns to shareholders. The company has total liabilities of over R6bn, while its assets are shares in Group Five Construction and Everite, a manufacturer of cement products.
According to the practitioners, the only asset that will realise proceeds is Everite, which is being disposed of.
The lender banks will be the only recipient of the proceeds from the sale. The entity will be wound up and delisted.
R5bn are the losses expected to be incurred by creditors under the business rescue plan
3,500 is the number of jobs that could be saved