As at the end of September, construction engineering company Basil Read has made significant progress in meeting key objectives of the business rescue plan, the embattled company reported on Tuesday.
A key objective of the business rescue, it said, was to facilitate the completion of loss-making construction contracts, which would minimise the risk of the performance guarantees being called and further burdening the balance sheet.
In this regard, the contingent liability of these guarantees had been reduced from more than R1.1-billion to R575-million, the company noted.
Over the June to September period, eleven of the company’s contracts were completed, with another five contracts terminated by the employers or joint venture partners. However, only two of those resulted in performance guarantees being called.
Additionally, over this period, Basil Read cancelled two contracts, reducing the number of projects the company has yet to complete, to two.
Further, the other objective of the business rescue plan was to maximise the value of construction claims. In this regard, the company on Tuesday said the business rescue practitioners had reported that the process was “time consuming, tedious and costly”.
They have, however, noted significant positive victories, particularly in the Trans-Caledon Tunnel Authority and Transnet contracts.
In these two instances, the Dispute Adjudication Board ruled in favour of the company for a number of claims and reversal of negative certificates. In this respect, Basil Read on Tuesday said it continued to pursue the other outstanding claims, which it said was “substantial”.
The success in the recovery of these claims would impact materially on the end result of the business rescue process, the company advised.
Additionally, the sale of the noncore assets remains an objective of the business rescue plan, the company reiterated.
Further, the retained businesses, being the Mining and Development businesses, which are not in business rescue, continue to perform well and remain self-sustaining, the company said.
The business rescue practitioners have appointed an independent sales adviser to value the Mining business and adjudicate on potential offers for the business.
Basil Read Holdings also confirmed that the implementation of the business rescue plan will continue, although the effect at a group level remains uncertain until it is completed.
Therefore, the company has indicated that the suspension will remain in place until the implementation is complete and the effects on the group can be determined.