Murray & Roberts (M&R) on Monday told investors it had secured R250m in credit and post-commencement finance from capital markets, indicating strong support from the financial markets as the group tries to get back on its feet.
The post-commencement finance funding of R130m is set to help M&R stay afloat by providing capital for operations and restructuring. This is after its subsidiaries, M&R and OptiPower units were placed in business rescue on November 22 to deal with various issues including a lack of liquidity, and business rescue practitioners were appointed.
The group also secured R120m in loan from financiers.
About R40m of the post-commencement finance was received in December and M&R said the business rescue practitioners continued to engage with the subsidiary company’s creditors, as well as with the post-commencement finance providers.
“These investors are well capitalised and have expressed their appreciation of Murray & Roberts’ expertise as a provider of mining contracting services, which rivals the best in the world, and the importance of preserving this capability,” the company said in a statement.
The funding boost coincides with M&R investors’ anticipation of a business rescue plan, which the company stated was expected to be submitted for creditors’ approval by the end of March 2025 at the latest.
CEO Henry Laas has said M&R would continue to sell off noncore assets. The company expects that the proceeds will generate enough revenue to pay off the R409m in outstanding debt owed to banks.
Core assets
Despite proceedings to facilitate the rehabilitation of its financially distressed businesses, M&R reminded stakeholders that the group’s core assets by value and earnings contributions were its underground mining businesses, which continue to operate as going concerns, delivering on their contractual obligations.
Cementation Canada, Cementation APAC, Murray & Roberts Cementation, and Terra Nova Technologies are the indirect subsidiaries of Murray & Roberts that are involved in underground mining and are not in any kind of administration or business rescue.
“These businesses have good prospects into the future, though their order books are being impacted by the business rescue of the subsidiary company,” it said. “The group manages a portfolio of high-quality underground mining assets. The business rescue practitioners and the group therefore remain confident about the prospects of a successful business rescue.”
M&R departed the SA construction industry in 2016 after projects slowed down after the spending frenzy leading up to the 2010 Fifa World Cup. Since then, it has concentrated on the water, energy, industrial and resource sectors — M&R’s mining unit now accounts for more than 80% of its revenue.
Since entering business rescue and asking the JSE to suspend the trading of its shares, the troubled group has seen four board members, including Suresh Kana, who had been group chair since July 2015, abruptly quit, with little explanation given.
Last week, Alex Maditsi, the board’s only remaining independent non-executive director was named acting chair with immediate effect after Clifford Raphiri, who was appointed interim chair of M&R on December 1 resigned.
The departure of four directors from the engineering and contracting major in quick succession erodes the group’s stability as it navigates a path back to profitability.
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