Murray & Roberts (M&R) Ltd has entered business rescue, weeks after the group warned shareholders that the cash crunch in its SA business was unsustainable, with the company also looking to sell noncore assets to shore up its liquidity — proceedings that the business rescue process is likely to speed up.
The company, whose stock is down 64% over the past three months, asked the JSE to suspend the trading of its shares on Friday.
M&R CEO Henry Laas stressed the distinction between the mining business and the rest of the group. He said M&R Ltd and its trading division, OptiPower, would be placed in business rescue.
“The group’s core assets by value and earnings contributions are its underground mining businesses, which will continue to operate as going concerns, delivering on their contractual obligations with good prospects into the future,” Laas said.
“The holdings board is confident that M&R Ltd is well suited for a successful business rescue. The group remains solvent as disclosed in its financial statements for the year ended June 2024, with a portfolio of high-quality assets in its core underground mining businesses. On this basis, the holdings board is confident that a successful business rescue will result.
“We will continue with the process of disposing of noncore assets and it is our expectation that the disposals will realise sufficient cash to settle the outstanding debt of R409m owed to the banking consortium, and most of, if not all, ‘post-commencement finance’ provided by the business rescue funding providers.”
The group has until January 2026 to repay R409m, having reduced the outstanding amount from a peak of R2bn last year.
Earlier this month, the group warned that a combination of the headwinds it was facing were likely to result in a drop of at least 20% in earnings when it published its financial statements for the six months to end-December.
M&R has said the cash crunch it was facing was having an effect on its operations, giving rise to unnecessary and substantial losses, especially in OptiPower, as a result of delays in procurement and project progress.
OptiPower’s business rescue will concern investors who have entrusted it with serious work. Its business rescue 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 said in August that it had won the contract through its OptiPower Projects subsidiary, 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 balance of plant scopes of work for renewable energy projects.
M&R has not paid a dividend since 2019 — with the business’s rescue suggesting an even longer wait for shareholders to see return on their investment.
The company’s largest shareholders are Aton and Excelsia Capital.
As part of its cash-savings measures, the group has already halved its headquarters space in Johannesburg. It said it expected renegotiating its lease to lead to corporate cost savings of R80m-R100m a year, starting in financial 2025.
M&R left SA’s construction sector in 2016 as projects dried up after the spending frenzy before the 2010 Fifa World Cup. It has since focused on the resources, industrial, energy and water sectors. The strategic change saw more than 80% of M&R revenue coming from projects undertaken by its mining unit.
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