Basil Read’s business rescue encounters ‘unforeseen setbacks’

THE IMPLEMENTATION of Basil Read’s business rescue plan has encountered “unforeseen setbacks”.

The listed construction company said in an update yesterday that these setbacks had severely impacted the cash flow estimated at the beginning of the business rescue process and increased the liquidity constraints on the business.

It said the business rescue plan contemplated that the post business rescue commencement finance would be repaid from the proceeds of the disposal of non-core assets of the groups and the resolution of claims.

However, it said the realisation of these assets and claims had been significantly delayed, despite the company approving the disposal of a 28 percent interest in the Majwe Mining Joint Venture by one of its disposals.

“The business rescue practitioners have also requested bridging finance and have advised that, provided the requested bridging finance is obtained without delay, they consider that there remains a reasonable prospect of a successful business rescue.

“Although the business rescue practitioners remain of the opinion that there is a reasonable prospect of achieving an end result that would be better than that of a liquidation, the further initiatives being considered may result in a material variation to the business rescue plan previously approved by creditors, which may require further creditor approval,” it said.

Basil Read was placed in voluntary business rescue in June last year after reporting in March a net loss after tax of R1 billion for its 2017 financial year.

It said the majority of the construction contracts it had at the time of the commencement of the business rescue proceedings had either been completed or terminated.

Challenges it had faced included the resolution and payment of contract claims taking longer than anticipated, there were few committed buyers for the non-core assets despite some interest from prospective purchasers, the timing of the acceleration of retrenchments had impacted the availability of resources despite assisting in reducing the cost base and claims had not yet been submitted by many pre-commencement creditors.

It said the challenges being experienced had resulted in the business rescue practitioners focusing on some of the key elements of the business rescue plan.

These included the completion of the profitable construction contracts, the cancellation and/or cession of onerous contracts, the resolution and recovery of outstanding claims, the disposal of non-core assets, the reduction of fixed overheads and labour costs.

Trading in Basil Read shares on the JSE was suspended in June last year.