Murray & Roberts takes big step to cut R2bn debt with sale of Gautrain stake
Specialist engineering group Murray & Roberts (M&R) has taken a giant leap in reducing its R2bn debt pile after concluding a deal to sell its 50% Bombela Concession Company (BCC) for R1.26bn.
Bombela was appointed to design, build, operate, maintain and partially finance the Gautrain project.
M&R sold its interest in the company to a wholly owned subsidiary of European toll and motorway developer and operator Intertoll International.
This was the final step after shareholders voted in favour of the deal at a general meeting on February 20.
The money will be used to cut M&R’s debt to R1.39bn, which should reduce its annual interest costs by about R95m.
“The group continues to focus on cash generation through operational performance, cost reduction and managing working capital prudently,” it said on Tuesday.
The Gautrain public-private partnership project was originally awarded in 2006 by the Gauteng provincial government to design, build, operate, maintain and partially finance the Gautrain project.
The project includes the maintenance and operation of the Gautrain rapid rail system around the Johannesburg area.
The project commenced in 2010, and to date has transported more than 60-million passengers.
Intertoll Group said in a statement it was pleased that it has achieved financial close with M&R for the acquisition of its 50% shareholding in BCC.
“The acquisition grows the Intertoll business significantly outside Europe, more than doubling the group revenues, and adds diversity to the Intertoll Group’s investments portfolio away from just roads with the move into the rail sector..
“Intertoll will look to grow their business in the rail sector further worldwide over the next few years, assisted by the experienced management team and references from the Bombela project,” it said.
M&R operates in several regions and has global expertise in shaft sinking, tunnelling, raise drilling, engineering, design and contract mining.
CEO Henry Laas last month told shareholders during a halfyear results presentation that “from a debt perspective, we are challenged”.
He added that a capital raise was among the debt-relief options it was considering as the company hunkers down to cut its debt in the coming months.
The group last month reported a net debt position of R2bn. It still reported a healthy order book worth R16bn.
The group said that considering its debt levels, it does not expect to declare a dividend this year.