Murray & Roberts (M&R), the South Africa-based international specialised engineering and construction group, has secured R250 million in post-commencement finance for its South Africa operations in business rescue, while its mining businesses retain good prospects into the future, directors said Monday.
On November 22, the group shocked its shareholders when it said that its South African subsidiary Murray & Roberts Limited, and its trading division OptiPower, had gone into business rescue, and that the group’s shares were being suspended on the JSE. The shares were suspended at a price of R1.10 each.
The group, in an update to shareholders, said Monday that after the appointment of the business rescue practitioners and in anticipation of the Business Rescue Plan, capital markets had expressed strong support for the group and a R130m post-commencement finance commitment was received.
Some R40m of this had been received in December 2024.
“These investors are well capitalised and have expressed their appreciation of M&R's expertise as a provider of mining services, and the importance of preserving this capability,” the group said.
The South African Federation of Civil Engineering Contractors (Safcec) has said previously that South Africa is losing experienced and skilled engineers to other countries, such as Ireland, the UK, and the UAE, and that this shortage was causing a regression in infrastructure development and leaving the country with fewer registered and experienced professionals.
M&R said it had also secured R120m of loan funding. It said that the business rescue practitioners continued to engage with the subsidiary company’s creditors, as well as the providers of the post-commencement finance, and a business plan was expected to be submitted at or before the end of March, for creditors’ approval.
Last year, M&R faced substantial losses in its South African trading division, OptiPower, which were exacerbated by the descoping of the Venetia diamond mine contract. Despite efforts to reduce debt and improve liquidity, the illiquidity challenges negatively impacted operations.
The group did warn at the release of its annual results to June 30 already that there was uncertainty about its going concern status if the South Africa business was not supported by dividends from international subsidiaries and if a term sheet with a banking consortium was not successfully concluded.
The group’s capital at year-end comprised shareholder equity of R1.6 billion (R1.8bn), debt of R1.3bn (R1.5bn), and cash of R1.6bn (R1.3bn).
The underground mining businesses are the core assets by value and earnings contributions, and these continue to deliver on contractual obligations. These businesses include the indirect subsidiaries Murray & Roberts Cementation, Cementation APAC, Cementation Canada, and Terra Nova Technologies.
While these businesses have good prospects, their order books have been impacted by the subsidiary in business rescue, the group said in a notice Monday.
“The group manages a portfolio of high-quality underground mining assets. The BRPs and the group therefore remain confident about the prospects of a successful business rescue,” M&R’s directors said.
BUSINESS REPORT