Foundry group now left on a more solid footing
• Restructured board and management team set to take business forward
Cast Products South Africa (CPSA), 85% owned by the Industrial Development Corporation of SA (IDC), was placed in voluntary business rescue by its board in December 2021. Business rescue practitioners were appointed in late January 2022. As the strategic equity partner, US-based Amsted Rail held the remaining 15% stake.
CPSA is the largest foundry group in SA — creating quality cast products used in the mining, railway, power and general engineering industries — and employs about 830 staff. The company was unbundled from the Scaw Metals Group in 2018. In the four years until it was placed in business rescue, the company lost about R1.7m, excluding the losses that accumulated after the IDC acquired Scaw Metals from Anglo American in 2010. The IDC has loaned CPSA R450m in post-commencement finance to fund operations.
The rescue practitioners received multiple bids for two of CPSA’s smaller plants and businesses. However, the two successful bidders failed to implement their offers, resulting in the decision by the shareholders of CPSA to provide funding to settle creditors.
Of the five divisions, three were identified as core — the wheel plant foundry, of which there exist only three in the world with the SA plant supplying Transnet with 60% of its spare parts; the Boksburg Foundry involved in the manufacture of smaller parts for the mining industry; and the UJ Foundry, supplying larger parts for Transnet, Eskom and the mining industry. The Standard Foundry property and Eclipse East Foundry were sold.
Through a high operational and production-focused turnaround, the company was taken from an average monthly loss of R40m to profitability in November 2022. The company produces for both local and export markets.
The board is in the process of being restructured and a strategic management team to take the business forward appointed. CPSA has managed to restructure more than R1bn of liability, retain the manufacturing capacity for SA and preserve the corresponding jobs under circumstances where the manufacturing industry is facing challenging economic times.
The conversion of debt to equity will see the IDC’s shareholding in CPSA increase to 93.5% and that of Amsted Rail reduce to 6.5%.