AVENG NETS R520M FROM DISPOSALS, SAYS NONCORE SALES TO BE WRAPPED UP IN 2020

Infrastructure and resources group Aveng reported
on Thursday that it had secured R520-million from the sale of six noncore
businesses, as well as other assets, and that the process of disposing its
remaining noncore businesses would be completed during 2020.

The three noncore businesses not yet sold
include Trident Steel, ACS and Aveng’s mechanical and electrical unit.

The companies already sold, or in the process of
being sold, include: Aveng Infraset to the Colossal Africa Consortium, for
R180-million; Dynamic Fluid Control to Copaflo Fluid Control, for R114-million;
Rand Roads to Ultra Asphalt for R37.5-million; Ground Engineering to management
and another shareholder for R7.5-million; Duraset Alrode to Videx for
R50-million and Grinaker-LTA building and civil engineering to the Laula
Consortium for R100-million.

The company disposals have raised R488-million and
have helped to create much needed liquidity for Aveng, which, in 2018, was in
danger of collapse, owing to a unsustainable debt of R3.3-billion and ongoing
losses.

The company’s capital structure has since been
stabilised, through a combination of shareholder, bondholder and bank support,
including R493-million in a rights issue, the redemption of a R2-billion
convertible bonds, a new R460-million debt instrument and the issuance of Aveng
shares to secure an additional R400-million in bank debt from a consortium of
lenders.

In the year to June 30, 2019, Aveng reported yet
another net loss of R1.68-billion, which represented a recovery from the net
loss of R3.52-billion recorded in 2018. Revenue decreased by 16% to
R25.7-billion, from R30.6-billion.

Nevertheless, the group’s net operating loss
increased from R401-million in 2018 to R1.2-billion this year, owing to a
R372-million operating loss by Moolmans, which together with McConnell Dowell,
remains a core business for Aveng.

CEO Sean
Flanagan described returning Moolmans to profitability as a
priority and attributed the “disappointing” results to the underperformance on
the Gamsberg and Khutala contracts.

A group-led intervention was under way to restore
sound operational performance and had already resulted in the appointment
of Jerome Govender as
MD and the strengthening of financial and operational management. The Gamsberg
contract had also been renegotiated with effect from April 1.

Aveng’s order book rose 36% to R17.7-billion when
compared with June 2018.

“We believe that we have stabilised the group and laid the foundation to achieve our longer-term goals and a sustainable future for our employees, our customers and our suppliers. Our strategy remains relevant and we are focused on improving equity value for our shareholders by completing the disposal of the non-core assets, reducing debt, returning Moolmans to profitability and growing the McConnell Dowell order book profitably,” Flanagan said in a statement. https://www.engineeringnews.co.za/article/aveng-nets-r520m-from-noncore-disposals-says-process-to-be-completed-in-2020-2019-08-29/rep_id:4136