Brief dip for beleaguered Group Five
The share price of struggling construction group Group Five yesterday briefly reacted to news that the problematic Kpone power project in Ghana has still not been completed, as the group promised when it released its annual results about a month ago.
In addition, the client has called on two of Group Five’s bank guarantees to the tune of $62.7 million (R893 million).
According to Group Five, this is an improper claim that “has not been independently determined and does not reflect the counter claims the group is ... pursuing”.
Group Five has applied for an interdict to stop the client from proceeding with the claim and is expecting the High Court in Johannesburg to rule on it today.
Group Five’s share price responded to the news, released just before 11am yesterday, by dropping from R1.18 to R1. It recovered within 30 min to R1.19 and was trading at R1.15 at lunch time.
Kpone woes
Group Five indicated at its results presentation that the Kpone project, which has cost it dearly and driven it to the brink, would be completed and handed over by the end of October.
On Tuesday the group disclosed that, while the commissioning has started, it cannot currently be completed, “with the key delay being due to contamination of the fuel being provided to the group by the client”. The provision of the fuel is the client’s responsibility and fuel contamination has to be resolved before the project can be completed.
Group Five continues to progress its contractual rights and entitlements through the alternative dispute resolution procedures.
“These have been significantly progressed ... including a submission to the International Chamber of Commerce in Paris in relation to claims against the client.”
Group Five continues to assess the ongoing financial position of the group and that the Kpone contract and its cash flow requirements are separately monitored.
Kpone project cannot be completed due to contaminated fuel being provided by the client.
Group Five, Construction engineering company.