M&R says it may get back control of parts of Australian units
The share price of Murray & Roberts (M&R) took its biggest leap since November after the group disclosed that it could soon regain control of parts of its Australian businesses after entering an agreement on how it will repay its debt and continue operating.
The share price surged as much as 17% to R1.16 on Tuesday before settling at R1.13 by the end of trade, making for a 14.4% increase.
After a voluntary administration process instituted in 2022, Clough, which held the energy, resources & infrastructure business unit, and RUC, which is a diversified underground mining contractor and raise drill specialist, were spun off from the group with effect from December 5 2022.
The move drastically reduced group equity to R2.2bn from R5.7bn, while its net asset value per share plunged to R5 from R13 in the comparative period.
In a statement on Tuesday, M&R, said it and its Australian subsidiary Murray & Roberts Pty Ltd (MRPL), and administrators had entered into a binding deed of company arrangement (Doca) which could see it regain full control of RUC Cementation Mining Contractors (RUC).
A Doca is an agreement between a company and its creditors on how to deal with corporate affairs after a company enters voluntary administration, and may include debt repayments and the potential sale of assets.
The arrangement serves as an alternative to liquidation and must be approved by the creditors. According to the Australian Securities and Investments Commission if creditors approve the Doca, the company must sign it within 15 working days, unless the court allows more time, otherwise it automatically goes into liquidation.
“The terms of the Doca remain confidential at this stage and there are conditions precedent to the Doca, including credit approval and MRPL creditors approving the Doca proposal at the second meeting of creditors,” M&R said.
The information will be provided to creditors ahead of the meeting expected in the middle of May, and if all goes well it looks set to be implemented at the end of June.
“Upon completion of the Doca, MRPL will come out of administration free from any further impact of the Clough administration.
Control of MRPL, together with RUC, its wholly owned Australian subsidiary company, will revert to Murray & Roberts,” the company said.
The board said in November that it had concluded the refinancing and upsizing of its existing local debt facilities from R1.6bn to R2bn after negotiations with lenders Standard Bank, Absa, Nedbank and RMB.
M&R’s corporate debt of R1.8bn in December was cut down after selling its 50% share in Bombela Concession Company, which is involved with the Gautrain, to Intertoll International Holdings.
However, in recent times, M&R saw its debt pile up.
CEO Henry Laas said earlier in March that the company was considering a capital raise as a possible option to reduce the amount of R800m.