JSE-listed construction engineering group Aveng says it has reached settlement on and received payment of R282-million for a long-outstanding claim, which was previously disclosed in its December 2021 interim results as an amount that had been subject to protracted legal proceedings.
The settlement results in a small profit to the previously reported position, reduced ongoing legal costs and the removal of litigation uncertainty.
This dispute dates back to March 2016, when Aveng subsidiary McConnell Dowell instituted action against a client with a view to recovering previously expended costs. Through the course of this protracted litigation and delay, McConnell Dowell has significantly grown its business despite having liquidity tied up in this dispute.
"The resolution of the dispute is a significant achievement and the resulting additional liquidity has currently been retained in McConnell Dowell and is reserved for future investment opportunities that add incrementally to the group’s growth and performance," Aveng says.
Additionally, Aveng has continued its debt reduction strategy during the financial year to June 30, through the scheduled repayment of R275-million in June. Cumulative repayments have reduced external debt by R350-million in the financial year.
"Should the Trident Steel transaction be successfully concluded, it is expected that the proceeds will be used to settle the remaining debt in South Africa, create further liquidity and strengthen the financial position of Aveng," the company says.
Aveng expects to release its full-year results on or about August 23.