Murray & Roberts (M&R) lost more than 20% of its market value on Tuesday after announcing it was in talks to refinance its debt and sell assets as it seeks to overcome a cash crunch at its SA business.
The construction and engineering company, valued at just under R1bn, ended the day 22% lower, extending losses to almost 40% since Tuesday when it informed shareholders that its SA business had been “severely” affected by liquidity constraints.
“Efforts are continuing to refinance the group’s debt [with a consortium of SA banks] and to raise a working capital facility for its SA businesses,” the group said in a statement.
“In the absence of a working capital facility, the group continues to experience liquidity constraints, which are having an impact on its operations, giving rise to unnecessary and substantial losses, especially in OptiPower, as a result of delays in procurement and project progress,” it said.
“The group has significantly reduced its debt with the banking consortium and has been conducting its business in SA with constrained working capital facilities for an extended period, which is unsustainable. It is important for the group to find a solution for its constrained liquidity position, and negotiations in this regard are progressing.”
The group has until January 2026 to repay R409m, having reduced the outstanding amount from a peak of R2bn last year.
The company said a combination of the headwinds it was facing were likely to result in a decline of at least 20% in earnings when it published its financial statements for the six months to end-December.
The news calls into question its ability to follow through on a R1.2bn contract to build a 100MWp (megawatt peak) solar photovoltaic renewable energy complex for a mining house in the North West, which it was awarded in August.
M&R in August said it had won the contract through its subsidiary OptiPower Projects, in a joint venture with Spanish energy infrastructure developer Coxabengoa. OptiPower’s share in the joint venture was 50%, it said.
OptiPower offers engineering, procurement, and construction solutions for high- and medium-voltage power lines, substations, and electrical balances of plant scopes of work for renewable energy projects.
M&R is bracing itself for a huge hit as diamond miner De Beers cuts back on a R2.6bn underground expansion project at its Venetia mine in Limpopo. M&R was selected as the preferred contractor but De Beers has since faced its own headwinds due to the structural changes in the diamond industry.
Earlier this year parent Anglo American wrote down the value of De Beers by $1.6bn and may even sell the company as part of a restructuring after itself being the subject of an unsuccessful $49bn bid from BHP.
“Recently, De Beers informed the group that it is reviewing its operational plans at Venetia Mine, and that a significant portion of the works under Murray & Roberts Cementation’s contract will imminently be descoped,” M&R said.
“Negotiations in this regard are under way and the impact on the group’s financial results for FY2025 are yet to be determined. This impact will be material considering that the contract represented more than 50% of Murray & Roberts Cementation’s business in SA.”
Part of the measures undertaken by M&R to preserve cash is to slash its operational costs by restructuring its operations. That included a new lease agreement for its office in Johannesburg where the group now occupies 50% of the floor space previously rented.
“The board has further resolved to commence a process of disposing of noncore assets to meet the group’s obligations to its banking consortium and restore liquidity to the group. If required, shareholder approval for asset sales will be sought at the appropriate time,” M&R said.
“The group is positioned for substantial new work in relation to the copper mines in Zambia, which could replace part of the lost Venetia contract revenue, but the timing of this work is such that it will not have much of an impact on the FY2025 financial results.” With Michelle Gumede
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