Basil Read plans rights issue and restructuring

Construction company reports a net operating loss of R474.1 million.
Picture: Supplied

South Africa construction company Basil Read said it plans to raise up to R300 million ($23.01 million) through a rights issue and will step up its restructuring efforts after it reported on Monday it had swung to a half-year loss.

South Africa’s construction industry has slowed sharply since the country hosted the 2010 soccer World Cup as infrastructure spending by President Jacob Zuma’s government has stalled and weak commodity prices have hit spending from the mining industry.

In response, Basil Read, which has operations in six countries, has merged some of its businesses, cut costs and exited loss-making operations. 

The company said in a statement that it would step up its restructuring, adding that this will likely bear the most fruit next year.

It said a poor performance by its roads division, along with the need to invest in new contracts at its mining business, has severely depleted liquidity.

“On a longer-term basis, we are in the process of raising capital through a rights issue. It is anticipated that total funds arising from this will be in the region of R200 million to R300 million,” the company said in a statement.

In the short-term, it has secured R90 million from the Industrial Development Corporation for the mining division and an initial R61 million bridging facility, it said.

Basil Read, which had headline earnings per share of 48.92 cents in 2016, reported a loss of 295.16 cents for the six months ended June and said its net operating loss was R474.1 million compared with a R34.4 million profit a year ago. ($1 = R13.0402) 

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