Brikor in bid for business rescue
Construction materials firm works with NUM to find solution
BRIKOR, the listed manufacturer and supplier of building and construction materials placed in provisional liquidation in August last year, claims it is financially distressed but trading profitability and has applied to be placed under business rescue.
Both Garnett Van Niekerk Parkin, the major shareholder of Brikor with a 53.3 percent stake in the company and chief executive at the time of the company’s provisional liquidation, and the National Union of Mineworkers (NUM) have applied for Brikor to be placed under supervision to commence business rescue proceedings.
NUM said the motivation for its application was to try and save its members’ jobs and prevent the knock-on effects a liquidation would have on communities in the East Rand where high levels of unemployment were prevalent.
The 345 NUM members employed by Brikor constitute almost 60 percent of the total number of employees.
Parkin said Brikor was financially distressed and it appeared reasonably unlikely it would be able to pay all of its debts as they became due and payable within the next six months.
But Parkin said there was a reasonable prospect of rescuing the company and for it to continue to exist on a solvent basis.
He said this was based on the fact the company was trad- ing profitably and had made a profit of R13.2 million for the six months to October this year and it had cash currently of R62.3m after repaying the R22.45m overdraft facility that FirstRand demanded repayment of in December 2012, and the R3.64m costs of the liquidators’ agents.
In addition, Brikor’s assets exceeded its liabilities, it had a stable workforce that supported the granting of a business rescue order; its prospects for the next six months were good and the company would continue to make profits; and if a business rescue order was granted, the company would receive a R40m cash injection from Parkin that would be used to meet creditors’ claims and operating expenses, he said.
NUM said there was a reasonable prospect of rescuing the company because it had continued trading since being provisionally wound up and had returned to profitability.
Due to improved trading conditions, the company had managed to achieve gross profit margins of 28 percent.
The union added Brikor’s management had prepared a five-year forecast that would maintain positive annual cash balances for most of the forecast period until February 2017; repay the FirstRand Bank in full by February 2017; and return to a positive cash balance by February 2018 and maintain that until February 2019.
Trading in Brikor’s shares on the JSE was suspended in August last year.