Embattled construction group Sanyati’s future – whether it would continue business rescue proceedings or follow its subsidiary into liquidation – would rest on the vote of its creditors, at a meeting scheduled for July 25.
In a business rescue plan, published on Wednesday, appointed business rescue practitioner Trevor Murgatroyd stated that there seemed to be no benefit in continuing the rescue plan, as the company would be unable to trade its way out of its current financial position.
“There does not appear to be any material benefit to the creditors of Sanyati by adopting the business rescue plan, as opposed to the benefits that would be received by creditors if Sanyati were to be placed in liquidation,” the plan stated.
The company would continue to incur costs by remaining in business rescue, the proceedings of which cost R2 500 an hour, to a maximum of R25 000 a day. This excluded the expenses incurred to carry out and facilitate the undertakings of the business during proceedings.
Sanyati and subsidiary Sanyati Civil Engineering and Construction (SCE&C) were placed under business rescue after they entered financial distress when a number of government departments failed to settle in excess of R70-million for contracts completed over a year ago.
Sanyati is dependent on the trading, income and profitability of SCE&E, which is being liquidated.
The tabled business rescue plan would, in the interim, continue to hold Sanyati under business rescue and place a moratorium on all claims against the group, while awaiting the completion of the liquidation of SCE&C.
The plan outlined that the proceeds from the liquidation would be allocated to business rescue expenses, any unpaid post business rescue employee claims, payment of preferential claims and payment of concurrent creditors. The remaining surplus, if any, would be distributed to the shareholders.
Shareholders included, besides others, Sanyati executive share incentive scheme, Sanyati 2007 acquisition trust, Eskom pension fund, 36ONE Hedge Fund and Agulhas nominees.
Ironwood Trustees would take control of Sanyati’s management and administrative functions, replacing Highway Corporate Services.
Murgatroyd would also attempt to sell the listed shell of Sanyati Holdings once the claims against Sanyati have been settled or compromised.
The business plan noted that the June salaries of CEO Malcolm Lobban and CFO and financial director Aléta Jovner were not paid and would be treated as post commencement finance.
Lobban and Jovner resigned in June and July, respectively.