Basil Read’s mining business will have to be sold in business rescue

BASIL Read’s business rescue practitioners believe a successful rescue of the listed construction group was achievable and aims to achieve this partly through the sale of the group’s mining business and other assets.

The business rescue plan was published yesterday and confirmed that a total of R238 million in post-business rescue commencement term loan facilities had been secured from funders, with Lombard Insurance Company also making available a loan facility of an unspecified amount subject to certain terms and conditions.

The plan still requires the approval of creditors at a meeting scheduled for September 3.

According to the plan, the business rescue practitioners would consider any offer to purchase Basil Read Mining, provided the terms of any offer were agreed to by the finance parties.

It anticipates the proposals in the business rescue plan would result in the payment of a dividend of between 70 cents and 90c in the rand to secured creditors, employees to be paid fully, post-business rescue commencement creditors to be paid in full and concurrent creditors to be converted to preference shareholders.

Despite uncertainties associated with the completion of construction contracts, the realisation of contract claims and the proceeds from assets identified for sale and immovable property, the business rescue practitioners said Basil Read’s net cash flows indicated that an initial business rescue dividend equal to or better than a liquidation dividend could be paid within the next 12 months.

It said preference shareholders may receive further business rescue dividends from distributions that may be received from the retained business over time.

The prime objectives of the plan included facilitating the completion where possible of construction projects in progress; realising maximum value from a number of assets, including contract claims, assets identified for sale, immovable property, surplus construction plant and equipment and non-core investments; optimising and preserving the value of the retained business; achieving and paying a business rescue dividend that was better than a dividend arising from the immediate liquidation of the company, restricting jobs losses and mitigating the risks of guarantors.

Assets Assets identified for sale include development land at the Klipriver Business Park and Rolling Hills, Basil Read’s head office and construction plant and equipment.

It was anticipated that these assets would be sold between January next year and February 2020.

The plan noted that Basil Read was indebted to the Industrial Development Corporation (IDC) for an amount of R206.26 million.

The business rescue practitioners highlighted a number of challenges to the successful business rescue of Basil Read.