Murray & Roberts (M&R), one of SA’s biggest engineering groups, has sought to reassure shareholders that it isn’t considering a right issue to sustainably manage its debt.
M&R cut net debt to R300m in the 12 months to end-June by from R1.1bn a year earlier, after selling its 50% interest in Bombela Concession Company, which operates the Gautrain project.
Still, its shares are trading at 66c, down 77% so far this year, valuing the company at R298m. While the company has been struggling for the better part of the past decade, it has flagged the Covid-19 pandemic as the singular event that threw its revival plans off course.
The pandemic disrupted global supply chains and restricted the movement of people which, in turn, slowed down project progress and extended project timelines, according to the company.
Longer timelines compounded costs and delayed project milestone payments, stretching working capital to a breaking point.
Before the pandemic, M&R led by Henry Laas had rejigged its portfolio to diversify its revenue base as large ticket infrastructural projects in its home market became few and far between as a result of the weak construction sector after the 2010 Fifa World Cup boom.
“Considering the deleveraging progress, the board is not considering a rights issue for purposes of debt reduction in SA but is working towards implementing a sustainable capital structure over the next six months, which will include the refinancing of the remaining debt,” M&R said in a statement on Thursday.
In 2020 and 2021, the company was implementing a large portfolio of projects before the pandemic and subsequent lockdowns struck. Its working capital requirements rose, resulting in its Australian businesses being put under administration in October.
From December 5, the group’s Australian holding company MRPL and Clough were removed from the books, which affected the group’s control over RUC Cementation Mining Contractors, a subsidiary of MRPL.
What remains of M&R is its mining platform, located primarily in North America and SA, as well as its smaller power, industrial and water platform in SA that specialises in power generation and renewable energy.
The order book from mining stood at R14bn at the end of September, compared with R13.6bn in June.
The company said the mining platform would benefit as the emphasis on energy transition gains pace, with increased demand for related commodities and the diverse range of services provided by the platform.
With Michelle Gumede
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