Group Five makes amends

CONSTRUCTION: RESTRUCTURING CLUSTER AFTER COLLUSION SCANDAL

Board, sub-committee and independent advisors to review VRP offers.

Group Five said yesterday that it was receiving a number of enquiries and correspondences regarding equity-based transactions following its voluntary rebuild programme (VRP).

But the listed company said it was not currently in possession of a bona fide offer of a binding or non-binding nature for any assets of the group.

Earlier this year, Group Five opted to dispose of a minimum 40% economic interest to fulfil its VRP responsibility.

This comes after seven of the 15 companies involved in the collusion uncovered by the Competition Commission last year signed a VRP agreement with government in a bid to make a significant financial contribution to the industry.

Construction companies had colluded around the 2010 Fifa World Cup stadium projects. They have already paid their first sum of R117 million to the National Revenue Fund in terms of the settlement agreement.

According to the agreement, the companies would collectively make a contribution of R1.5 billion over 12 years to the Tirisano Trust, established for social and economic development, with a direct bearing on the construction sector.

The contribution would be additional to the R1.46 billion administrative penalties already imposed by the competition authorities for collusive practices.

Group Five has previously stated it would pursue the option of an equity transaction in honouring its obligations in terms of the VRP and to support the transformation of the company.

The company said the enquiries and correspondences it was receiving would be reviewed by the board, the mergers and acquisitions sub-committee and independent advisors, who would then determine the next steps.

A key criteria used in assessing any expression of interest was whether the proposal has the ability to enhance shareholder value, either by complementing the group’s strategy of being a portfolio of counter-cyclical businesses, or by realising value to shareholders which could include a strategy to unbundle certain businesses.

The group said it continued to make progress in the implementation of the restructure of this business cluster and was on track to re-align the cluster’s overheads.

To date, the business units comprising this cluster have been streamlined from 11 to four, which has resulted in a simplified management structure and a reduction of 149 salaried employees.

Last week, Group Five permanently appointed Themba Mosai as group chief executive with immediate effect. – ANA