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16 May 2019

Business rescue practitioners
(BRPs) at Group Five reported on Wednesday that the disposal of stakes in
three companies, together with sale of plant, assets and property, is expected
to yield proceeds of R709-million.

Group Five’s shares were suspended in March after the company
entered business rescue and David Lake and Peter van den Steen were appointed as the
joint BRPs.

The Business Rescue Plan has not yet
been published, but is scheduled for release by June 28.

In their first monthly update to shareholders, the BRPs said proceedings
were progressing, with binding agreements having been concluded for the
disposal of a 40.1% shareholding in Intertoll
Capital Partners
 (ICP), as well as Group Five’s 50%
shareholding in Barnes Reinforcing Industries (BRI) and its 28.9%
shareholding in Jozi Power.

Sales agreements had also been reached for plant, assets and property
not being used in the ordinary course of business.

The disposals of ICP, BRI, Jozi Power and
the property assets were still subject to conditions precedent, however.

“Proceeds received from assets subject to security agreements will be
utilised to reduce the relevant secured debt, and the balance of unsecured
proceeds has been, or will be, utilised to settle working capital

A reconstituted sale process was also under way for Group Five’s manufacturing cluster, as well as the
balance of the Intertoll
 business, following the sale of the
40.1% holding in ICP.

Post-commencement finance (PCF) arrangements had
been concluded with a consortium of bank lenders and an initial drawdown
secured to finance working capital
requirements. Discussions were ongoing with the consortium on further PCF

Lake and Van den Steen reported that the majority of Group Five construction projects would continue to
completion, but certain nonperforming projects had been exited, while
others had been cancelled unilaterally by clients.

In parallel, the company was undergoing a retrenchment process to reduce
headcount and the “cash burn associated with the currently high (relative to
the underlying businesses) head office costs”.

The company’s 2018 annual report stated that it had 7 394 employees across all units, 5 766 of whom worked for the construction unit. https://www.engineeringnews.co.za/article/rescue-practitioners-expect-proceeds-of-r709m-from-initial-group-five-disposals-2019-05-15

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