Embattled construction group Basil Read announced after market closure on Tuesday that it has reached agreement with six creditors for an 18-month debt standstill.
The creditors are Aluwani Capital Partners, Credit Guarantee Insurance Corporation (CGIC),the Industrial Development Corporation (IDC), Investec Bank, Lombard Insurance Company and Standard Chartered Bank.
These creditors have collectively loaned Basil Read R380 million and extended guarantees to the value of more than R1 billion. They have agreed to refrain from immediately calling up or enforcing their debts or commencing legal proceedings “in relation to the suspension of payments, winding-up, dissolution, business rescue, administration or reorganisation of Basil Read Group Companies”.
They further agreed not to withdraw any unused or undrawn amounts on the facilities extended to Basil Read.
The creditors’ individual exposure is as follows:
|Aluwani||ZAR 50 000 000 capital loan|
|CGIC||ZAR 372 098 783 guarantees|
|IDC||ZAR 290 000 000 capital loan|
|Investec||ZAR 20 000 000 capital loan|
|Lombard||ZAR 464 000 000 guarantees|
|Standard Chartered||BWP 23 000 000 capital loan plus ZAR 217 958 860 plus guarantees|
The agreement is for 18 months starting on December 1 and ending on May 31, 2019.
It provides for certain milestones, including the implementation of the rights offer by the end of May, an agreed upon schedule for corporate restructuring and the creation before the end of February 2017 of an “insolvency remote special purpose vehicle”. This vehicle will provide further security to the six creditors including one or more notarial or mortgage bonds over construction equipment over identified assets.
Basil Read states that the proceeds of the planned rights offer will be utilised to reduce debt, increase working capital and fund operations.
In terms of the agreement, Basil Read will have to get approval from at least 66.67% of the six creditors before it may dispose of major assets, pay bonuses to executives, make material changes to the group, take steps towards winding up, dissolution or reorganising the group or create new security over the group, other than that agreed upon with the sic creditors.
Basil Read’s share price closed at 74c on Tuesday. It has lost almost 57% of its value in the year to date.