Practitioners confident that a solution at Esor is in sight
Creditors agreed to grant the business rescue practitioners an extension until February 12 next year
ESOR’s joint business rescue practitioners still believe there was a reasonable prospect of developing and implementing a business rescue plan that would ensure the continued existence on a solvent basis of the listed engineering and construction group.
Esor confirmed this yesterday but stressed this would require a reorganisation of the financial affairs of the company and an arrangement about its liabilities between the company and its creditors.
Esor Construction, a major subsidiary of Esor, in August became the latest prominent construction-related company to file for business rescue.
Esor said yesterday that the business rescue practitioners last month convened a meeting of the company’s major creditors, comprising the bank and guarantors together with the company’s largest trade creditors.
It said the business rescue practitioners presented a summary of their work to date to creditors and explained that calculations to determine the outcome of the immediate liquidation of the company indicated that only the company’s secured creditors and employees would receive payment.
The business rescue practitioners also demonstrated that a business rescue plan in terms of which the company’s book debts were collected in an orderly fashion would at best result in the payment of between 15 cents and 25c in the rand to creditors, it said.
However, the business rescue practitioners indicated that because of the present state of the company’s contracts, there were still many uncertainties about their final outcome and how they would impact on claims against the company by its guarantors.
Esor said it was also conveyed to the creditors present that the business rescue practitioners were engaged in discussions with various parties about proposed alternative restructuring options which, if successful, would be much more beneficial to creditors than the publication of the business rescue plan that contained many uncertainties and no meaningful restructuring of the company’s affairs.
It was proposed and unanimously agreed by the creditors present to grant the business rescue practitioners an extension until February 12 next year to publish a business rescue plan.
Esor added that initial actions taken by the business rescue practitioners during the business rescue included the suspension and subsequent termination of a number of contracts, including Claremont Clinic, the AE du Toit Building at the University of Pretoria, the De Kraal sports facility in Paarl and lateral support work at Kriel.
The reasons Esor had decided to voluntarily place the company in business rescue included significant losses incurred on certain construction contracts in the current and prior years, it owing its creditors an estimated total amount of R130 million, the current challenging economic environment within the construction sector in the country, and the inability of the company to obtain further short to medium-term funding.
Trading in Esor’s shares on the JSE was suspended at the company’s request on August 17 this year.