The implementation of the business rescue plan of embattled construction company Basil Read Limited (BRL), a subsidiary of Basil Read Holdings, continues, even as its effect at a group level remains uncertain until its completion.
According to monthly reports published by the business rescue practitioners (BRPs), the suspension will remain in place until the implementation is complete and the effects on the group can be determined, the report said.
There are currently three construction contracts that are still active, versus 27 at the start of business rescue proceedings for BRL.
The majority of the contracts have been completed, ceded or descoped amicably, said the BRPs, who confirmed in the latest business rescue reports that only four contracts were terminated.
Aggregate contingent liability in the form of performance and retention guarantees have been reduced to R264.8-million during this period, versus R1.1-billion at the beginning of the business rescue proceedings.
However, BRL has also been “significantly impacted” on by the Covid-19 virus and the subsequent national state of emergency declared on March 26, as well as state of emergencies declared in Botswana, Namibia, Lesotho and Swaziland, which resulted in all site activities being suspended.
While some site activities were allowed to resume at the start of May, the BRPs indicated that it is anticipated that the disruption will delay the completion of the remaining contracts by at least two months.
BRL continues to pursue contract claims, despite the process remaining “time consuming, tedious and costly”. The company has, however, managed significant success in the resolution of many such claims, the processes of which have also been impacted by the Covid-19-related lockdowns, particularly matters that were to be heard in courts or arbitration.
The resumption of these cases currently remains uncertain, as there has not yet been clarity on when the courts will resume allocating dates, the BRPs said in the reports.
The mining services and development business, meanwhile, were also adversely impacted on by the pandemic, with various clients declaring force majeure and certain long-term contracts being terminated with several retrenchments as a result, particularly within BRL’s mining business.
However, the BRPs noted that these businesses have managed to preserve cash in order to remain sustainable despite the impact of the pandemic, and they remain of the view that a full implementation of the business rescue plan will achieve a better result than a liquidation.