GROUP FIVE BUSINESS RESCUE PLAN PUBLISHED

The business rescue practitioners (BRPs) for
embattled construction company Group Five Construction (G5 Construction), Dave Lake and Peter van den Steen, have released the
business rescue plans for the company and for Group Five Limited.

Voting on the business rescue plans for both
entities will take place in consecutive meetings on September 11.

Notwithstanding that G5 Construction is an
“extremely complex and wide-ranging business under severe financial distress”,
the BRPs remain confident that a successful business rescue will balance the
rights and interests of all relevant stakeholders.

In a joint statement last week, the BRPs said the
losses incurred by creditors would be materially less, at about R5-billion,
under the proposed rescue plan, relative to the alternative scenario of the
company’s liquidation.

Through the restructuring and sale of businesses,
the BRPs anticipate that between 3 000 and 3 500 jobs will be saved,
albeit under new ownership.

The BRPs have successfully secured funding from the
lender banks to provide operational solvency during the business rescue
proceedings and to ensure that asset sale value realisations are optimised and
losses from projects minimised.

Wherever possible, subsidiaries and operating
divisions of G5 Construction have been or are being restructured and disposed
of under new ownership, for fair value, on a solvent basis and as going
concerns.

Where this was not possible, a controlled wind down
of the relevant subsidiaries and companies – as well as the head office of the
company – would be implemented, the BRPs said.

All other assets, financial or otherwise, of the
company are being vigorously pursued and/or disposed of in controlled disposal
processes.

Although certain of these sales processes include
complex sales of international assets, and/or regulatory procedures and
approvals that are outside of the control of the BRPs, they anticipate
completing most sales by the end of March 2020.

The business rescue plan further outlined three
distinct trading periods, which include the period from the start of business
rescue proceedings to the date of approval of the business rescue plan
(pre-plan period).

The second period follows the pre-plan period until
the end of March 2020 (Implementation Phase 1).

Thereafter, the focus will be on the period
following Implementation Phase 1 until the termination of business rescue
proceedings (Implementation Phase 2).

The BRPs aim to accelerate the payment to creditors
of early distributions to which they are entitled, including early
distributions to be made during or at the end of Implementation Phase 1.

On successful implementation of the business rescue
plan, secured creditors are, in aggregate, expected to receive distributions of
between 66c and 78c, relative to the 18c forecast in the case of liquidation.

Concurrently, creditors are expected to receive distributions of between 9c and 20c, relative to the 3.4c forecast in the case of liquidation. https://www.engineeringnews.co.za/article/group-five-business-rescue-plan-published-2019-09-02/rep_id:4136