Aveng is looking to settle its legacy debt by the end of June, an important step in the infrastructure and resource company’s long journey to repair its balance sheet. It is also exploring a potential foreign listing to attract institutional investors.
Aveng said on Tuesday it would use part of the R700m proceeds of the disposal of Trident Steel to pay off the remaining SA legacy debt of R353m, down from R3.3bn in 2018.
“What is interesting is that on top of paying down that debt, we’ve also had to service it so we’ve spent more than a further billion rand in interest payments and fees to the banks, so that’s why we are so focused on paying it down because clearly if we can save that amount of money and invest it into our business, then we can really do some really spectacular things with Aveng,” CEO Sean Flanagan said in an interview.
Aveng has since reoriented its portfolio away from the SA construction market where big-ticket infrastructure projects were few and far between in the past decade. To survive the industrywide slump, the company has been cutting costs and divesting from noncore operations, which included the sale of Grinaker-LTA and the manufacturing and steel business units in 2019.
Its focus is now split between two operating subsidiaries: McConnell Dowell and mining contractor Moolmans.
McConnell Dowell offers engineering and infrastructure solutions in the transport, water and wastewater, ports and coastal, energy, resources and commercial building sectors. Its operations cut across Australia, New Zealand and Southeast Asia, which the company considers to be one of its growth vectors.
It intimated that it may move its listing primary listing to Australia or have a secondary foreign listing there, but would not be drawn on details.
“We are a southern hemisphere player, we are not chaps who wear grey suits and live in London, so we do look at the southern hemisphere, the size of relative markets and look at what the competitors would be and how they stack up in terms of earnings, and what kind of after you can get from institutional investors.” CFO Adrian Macartney said in an interview.
“Remember we’ve got to rebuild an institutional after in this organisation because you can’t deny the history and so you’ve got to rebuild that, you rebuild that over time through consistency of some earnings and performance.”
“So broadly we’d like a capital market that is deep, sufficiently liquid, where we can be relevant and frankly where we can raise capital.”
Its primary listing is now on the JSE, where its share price leapt 12.60% to R14.30 in early afternoon trade and closed 12.99% higher at R14.35.
Operating earnings in McConnell Dowell rose 15% to A$15m in the six months to end-December compared with those of the matching period a year ago. However, operating earnings fell to R20m from R99m.
At the group level, earnings before nonrecurring items dropped to R181m vs R215m.
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